Controversial reforms to inheritance tax are the “single biggest issue” facing farmers, according to a long-awaited report into the profitability of the sector.
The Farming Profitability Review – authored by Baroness Minette Batters, former head of the National Farmers’ Union – says the industry is “bewildered and frightened” of what might lie ahead.
The publication of the government-commissioned review had been delayed, with some claiming it was shelved till after the chancellor’s budget last month, to avoid scrutiny.
The report makes 57 recommendations on how the government can improve profitability – with Baroness Batters saying farmers are facing “huge economic challenges”.
But it stops short of offering alternative proposals to inheritance tax reforms (IHT), with Baroness Batters saying that was outside the terms of reference set.
The changes – due to come into force next April – will see farms with assets of more than £1m pay 20% tax. Previously farms had been exempt.
The reforms have led to thousands of farmers protesting in London over the last year, with many saying the IHT payments will make many smaller farms no longer viable.
“Nearly all the responses to this review have cited inheritance tax as the single biggest issue regarding farming viability that they face. The farming sector is bewildered and frightened of what might lie ahead,” said Baroness Batters.
She added that the “core focus” of her recommendations is to “restore balance between food production and the environment”.
The report highlights the threats of climate change to farming, which accounts for 70% of UK total land.
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Recommendations also include growing ‘Brand Britain’ through increased exports and supermarket sales – and ensuring better monitoring of supply chain fairness.
Reacting to the report, the Department for Environment, Food & Rural Affairs announced a new board to bring together senior leaders from farming, food production, retail, finance and government to strengthen UK food production.
Environment Secretary Emma Reynolds said: “When farming thrives, the whole country benefits. British farmers are central to our food security, our rural economy and the stewardship of our countryside.
“Baroness Batters’ review underlines the need for government, farming and the food industry to work much more closely together. That is exactly what the new Farming and Food Partnership Board will do.”
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Baroness Minette Batters said: “I’m pleased that the Secretary of State recognises the need to establish a new approach to growing the British brand at home and abroad by producing, creating and selling more from our farms in a measurable way.
“With ever more extreme weather, the horrific, ongoing war in Ukraine and 69.7 million people in the UK now is the time to deliver food security as national security.”
The government will set out its full response in a new 25-year Farming Roadmap, due for publication next year.
