Farms Tax Fiasco: Why Did Starmer's Government Blink Now?

The UK government’s recent concession regarding the controversial 20% inheritance tax on farms, often labeled the ”farms tax,” has raised eyebrows, particularly as this shift happens after a year of steadfast defense by ministers. Initially set to go into effect next April, the government’s retreat, which exempts about half the farms affected, is seen as a victory for farmers who protested. The National Farmers’ Union (NFU) played a significant role in both public protests and behind-the-scenes diplomacy with government officials.

Despite the governmental pushback on the policy for over a year, a multitude of factors led to this change. Notably, the landslide Labour election victory increased the number of MPs from rural areas, creating internal pressure on the government to reconsider. In a recent parliamentary vote, while only one Labour MP outright opposed the tax, more than 30 abstained, signaling widespread concern among representatives.

The timing of the U-turn is also intriguing. Following a testimony from Sir Keir Starmer before the liaison committee where pressing questions regarding farmers’ mental health were raised, including alarming suggestions that some farmers might consider suicide over the tax, the government appeared to act out of urgency. With the looming return of MPs, Downing Street likely aimed to dispel negativity surrounding the new year.

Moreover, critics noted that the decision to change policy during the recess and minimize scrutiny reflects political insecurity from a government that holds a majority in Parliament. While many Labour MPs celebrate this retraction, others question why the government enacted a policy anticipated to yield a modest £130m—only a small part of the £900bn total tax revenue.

The ongoing saga hints at a troubling trend: proposals inducing public outrage followed by ineffectual policy adjustments that leave doubts about the government’s political judgment and ability to enact effective fiscal strategies.