Labour is losing the PR battle over the ‘tractor tax’

As opinion polls show strong public support for farmers and their plight, the government will probably have to back down over its inheritance tax plans – unless food supplies to supermarkets are affected, says Andrew Grice

Who will decide who wins the fight between the government and the farmers? The public – and, according to opinion polls, the farmers appear to be ahead.

More in Common found that 57 per cent of people support making farmers exempt from inheritance tax, including 45 per cent of Labour voters. YouGov reported that a narrow majority (52 per cent) would support protesting farmers withholding non-perishable items, such as meat or certain crops, for a week.

The farmers’ protests in London yesterday won sympathetic media coverage, which highlighted the human cost of the “family farms tax”. People who knew little about farmers’ way of life are learning about it through a positive lens. There is instinctive public support for being able to pass on assets to your children; inheritance tax is the most hated tax, even though only 6 per cent of estates pay it.

However, public opinion could change if farmers carry out their threat to disrupt food supplies to supermarkets or take other action that affects the public.

That is the lesson of the fuel price protests in 2000, when a small number of hauliers and farmers blockaded refineries and petrol stations ran dry. The crisis shook Tony Blair and his government. But public opinion, initially supportive, turned when people struggled to buy petrol and realised the NHS was being hit.

Although the fuel price hike was driven mainly by global oil prices rather than a Budget, UK fuel duty was the highest in Europe – and there are other parallels with today’s battle. As now, ministers felt the protests were amplified by Tory-dominated newspapers to kick a Labour government and believed the protesters were not “our people” – in other words, Labour voters.

The then Conservative opposition leader, William Hague, expressed sympathy with the action, just as Kemi Badenoch does today. Memo to Badenoch: the Tories moved ahead of Labour in the polls by up to eight points in 2000. But after the protests were called off, normal service soon resumed, and Blair won a second landslide nine months later.

So ministers and farmers’ leaders will be watching the opinion polls anxiously. If farmers “lose” the public, they will surely have to back off. But if they retain public support, the government will probably have to back down.

Although the Treasury is ruling out a U-turn, ministers do have other options. The Department for Environment, Food and Rural Affairs is privately sympathetic to exempting farmers over a certain age, perhaps 80. The government could probably raise the £500m or so it seeks through a 30 per cent inheritance tax rate on farms worth more than £5m, rather than the proposed 20 per cent on those worth more than £1m.

They could decide not to impose the tax on working farmers, only activating it when farms are sold, to hit their main target – wealthy landowners who use agricultural property relief to avoid tax.

While some of the 100 Labour MPs representing rural seats want the policy “tweaked” to soften the impact on farmers, most of the party’s MPs support it. They view it as in line with ensuring those “with the broadest shoulders” make the biggest contribution to stabilising the public finances.

However, many Labour backbenchers are deeply worried about another controversial decision by Rachel Reeves – to means-test the pensioners’ winter fuel allowance. They fear this story will run and run over the winter months and be linked by the media to the deaths of old people.

Their concern has been heightened by internal government analysis showing the move could push up to 100,000 pensioners into relative poverty. (Ministers insist the figures do not take into account the increased uptake in pension credit, saying it is up by 152 per cent since July).

As with farmers, the Starmer government risks losing the propaganda battle. Ministers have been slow to argue for the change on the grounds of intergenerational fairness; hardship among children and adults is a bigger problem than pensioner poverty. A study this week found that 16 million people live in families in poverty – including 9.2 million working-age adults, 5.2 million children and 1.5 million pension-age adults. Due to the “triple lock”, the state pension has risen more generously than other benefits, including those for children.

In pensioners and farmers, the government appears to have picked a fight with two powerful lobby groups. Given Labour’s rotten fiscal inheritance, ministers insist there are no pain-free decisions. They have a point. However, the government needs to learn to choose its targets more carefully and make its case more powerfully.