Given the outraged reaction of British farmers to the Starmer/Reeves ‘farmer harmer’ tax, some people might wonder why this new tax was ever introduced. After all, it will be collected quite slowly as it will be paid over 10 years after a farmer dies. Moreover, it will raise very little money as, like all new taxes, it will generate considerably less revenue than planned as it will lead to a change in behaviour as farmers consult tax consultants to find ways of avoiding the new tax.
In Britain, we’ve had several taxes which have come and gone due the inevitability that they change people’s behaviour. There was Henry VIII’s Beard Tax, reputedly introduced in 1535. Avoidance was easy – you just shaved off your beard. In 1662, Charles II brought in an early type of poll tax, the Hearth Tax. It was considered too difficult to count how many people lived in each house, so instead the tax was based on the number of chimneys per property. The result was that enterprising citizens started combining several fireplaces into a single chimney. A few hundred people are thought to have died in the ensuing fires. In 1696, William III brought in a Window Tax, which led many householders to brick up some of their windows. 1795 saw the introduction of a tax on wigs and wig powder. Result: wigs became less fashionable. And around 1800 the Government started a Hat Tax. Each hat had to have a stamp sewn into it to show that it was legal. The penalty for forging these stamps was death, which might give some people odd ideas about how to deal with today’s large tech companies which avoid many taxes.
There are several possible explanations for the ‘farmer harmer’ tax. These are not mutually exclusive. So some or all may be true at the same time.
On a basic level, some people might see this as a typically vindictive Labour assault on a group Labour feels have traditionally voted Conservative and therefore there are no votes to be lost by penalising this group. In fact, just as Stalin demonised the ‘kulaks’ for allegedly causing food shortages by hoarding grain, Labour may be hoping that its mostly inner-city electorate will cheer its farmer-bashing when supposedly greedy millionaire farmers are landed with new taxes on their supposed ‘massive wealth’.
A further explanation is that the ‘farmer harmer’ tax may force many smaller farmers out of business. Given the low financial returns on most British farms, many farmers are asset rich but cash poor. This may mean that there will be few buyers able to afford to buy the farms which the ‘farmer harmer’ tax forces inheritors to sell. This would allow the Labour Government, possibly using the vehicle of the Government-owned Great British Energy, to pick up these farms at knock-down prices and convert them from what Labour seems to see as ‘useless’ food production to much more useful (in Ed Miliband’s eyes) wind and solar farms.
While on the subject of Miliband’s wind and solar farms, it might be worth mentioning that the head of one of Germany’s largest electricity companies once remarked that trying to get energy from solar power in Northern Europe was like trying to grow pineapples in Alaska. Ooops, silly me. I’ve just given Ed Miliband another unhinged idea. Looking at the amount of fossil fuel used to transport pineapples from South America or wherever they’re gown, Miliband could claim he’s saving the planet by squandering billions of our money subsidising pineapple farms in, say, the north of Scotland, thus creating thousand of supposedly ‘well-paid and highly skilled green jobs’ on British pineapple farms to replace the hundreds of thousands of real, well-paid, highly-skilled jobs in the Scottish offshore oil and gas industry which he is intent on destroying.
Anyway, back to the ‘farmer harmer’ tax.
There is a third, rather more sinister possible reason for our Government’s enthusiasm for this tax. In July 2024, the think tank Demos published a report titled ‘The Future of Inheritance Tax in Britain‘. On its home page Demos describes itself as follows:
Demos is an independent think-tank set up to improve the breadth and quality of political and policy debate. It encourages radical thinking and solutions to the long-term problems facing the U.K. and other advanced industrial societies.
A LSE review of think tanks concludes that Demos is a: “Think tank focused on power and politics – historically Left-leaning, but independent of any political party.”
A key issue covered in the Demos report is the number of exemptions from inheritance tax in the U.K. The report notes: “The U.K. is unusual in offering 100% relief for owned businesses and agricultural property, and not counting most private pensions for inheritance tax purposes.” If you’ve looked at Rachel Reeves’s changes to inheritance taxes, in particular those concerning SIPPs and inheritance tax on agricultural land, you might detect more than coincidental similarities to the recommendations of the Demos report.
The main sponsor of the Demos report is the ludicrously vowel-less abrdn asset management firm through its abrdn Financial Fairness Trust operation. Abrdn manages at least £506 billion of U.K. and global assets. In 2015, abrdn bought the multi-billion dollar U.S.-based FLAG Capital. FLAG stands for ‘Forest, Land and Agriculture’. In a 2018 report abrdn seems to express frustration at the difficulty in acquiring farmland due to so much being owned by families:
Given the family ties involved in the farmland sector, there may be multiple interests (not just financial) that could potentially create challenges in the ownership shift to purely financial owners.
“Purely financial owners” are, of course, companies like abrdn.
Abrdn is one of the biggest real estate owners in the U.K. and, in its December 2023 annual financial report, cites its ownership of nearly £76 billion of real estate assets and its intention on growing this area of its business.
It has been repeatedly reported that Microsoft’s billionaire founder and fêted philanthropist Bill Gates is the largest private owner of agricultural land in the U.S. Forbes tells us:
After years of reports that he was purchasing agricultural land in places like Florida and Washington, the Land Report revealed that Gates, who has a net worth of nearly $121 billion according to Forbes, has built up a massive farmland portfolio spanning 18 states. His largest holdings are in Louisiana (69,071 acres), Arkansas (47,927 acres) and Nebraska (20,588 acres). Additionally, he has a stake in 25,750 acres of transitional land on the west side of Phoenix, Arizona, which is being developed as a new suburb.
What seems to be becoming clear is that there is a rush by the rich and by financial institutions to buy up farmland. And in Britain, the close similarities between the abrdn-sponsored Demos inheritance tax report and some of the changes in Rachel Reeves’s budget might lead some people to suspect that the ‘farmer harmer’ inheritance tax changes will conveniently help companies like abrdn overcome the hurdle of family ownership of land.
Quite why the rich and financial institutions are so intent on grabbing agricultural land, I don’t know. But if you think that it’s due to an altruistic desire to provide us with cheap, high-quality food, then a Nigerian prince and I have a wonderful investment scheme to sell you.
David Craig is the author of There is No Climate Crisis, available as an e-book or paperback from Amazon.
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