Fields of broken dreams

How the farmers' protests over inheritance tax illustrate the impossibility of building a fairer society without tackling the underlying causes of unfairness

Three weeks ago, we ran a workshop with King’s College London and a diverse group of attendees (more on this in a few weeks) in which we looked at the potential impact of increasing wealth inequality on society over the next decade or so, and what to do about it. One of the breakout groups speculated that we might see ‘tractor riots’ in major cities in the early 2030s.

They were almost on the money, of course, but they were a few years too late. The tractors arrived in Westminster exactly eighteen days later - albeit in the form of peaceful protests, not riots - in response to the government’s removal in October’s budget of inheritance tax relief on agricultural land.

It’s clear that the anger of the farming community is deeply felt. As The Lead notedover the weekend, “British farming is in deep, deep trouble”, with a series of simultaneous and interweaving shocks leaving farming communities “simultaneously pressed down and pulled asunder”. Because of this, it’s hard to separate out anger at these latest tax changes from simmering frustration at the broader challenges affecting farmers. To add to the complexity, most people have a visceral dislike of inheritance tax that bears little relationship to how it actually works.

However, it’s equally apparent that these protests have been co-opted by three groups: wealthy landowners, who buy up agricultural land primarily to avoid paying inheritance tax (Clarkson, Dyson et al); the broader wealth defence industry, who spot an opportunity to recruit new allies in their battle to protect the privilege of their clients; and the far right, who similarly spy a chance to build up their legitimacy and their support in territory previously unfamiliar to them.

The evidence strongly suggests that only a tiny number of the very wealthiest stand to be affected by the reforms. The arguments have been well rehearsed by others, such as Tax Justice UK, while Full Fact and BBC Verify have both carried out detailed analysis that broadly backs up the government’s estimates that only a few hundred estates per year will be affected.

This reform should, in theory, be well targeted at precisely those people who should be paying more tax - very wealthy people who buy land in order to contribute less than their fair share to society - while avoiding putting even more pressure on actual farmers, who arguably require more support from society than they get at the moment. In fact, it should help farmers, by dissuading wealthy speculators from buying up agricultural land to avoid tax (which pushes up prices for everyone else).

However, this isn’t the perception, with protestors convinced that the reforms will “kill off traditional landowners and farmers”. The government is holding its nerve so far in the face of continued opposition, but whether or not it continues to do so, it has clearly paid a political price, not least in allowing the far right to gain a foothold, however small for now, in rural communities across the country.

As The Lead argues, there’s a clear opportunity - arguably more of an urgent need - for the government to “open a wide-ranging dialogue with farming communities to forge a new social contract”. This is a classic example of where an unwillingness to tackle the underlying causes of a problem, in favour of the apparently less risky route of treating the symptoms, ends up being just as politically difficult - because solving one problem creates another, and/or because sticking plaster reforms are just as vulnerable to cynical pushback from vested interests as more fundamental changes.

It also casts a spotlight on the limitations of tax as a tool to correct for underlying causes of unfairness in our society and economy. This is not to suggest that tax doesn’t play a hugely important role in redistributing wealth and income, while raising vital revenue for public services. But the tax system is often asked to do more than can reasonably be expected of it. Sometimes other approaches, such as regulation, are likely to be more effective.

Wealth inequality is an underlying driver of the unfairness that we see exposed by these protests. In our recent Wealth Gap Risk Register, we outlined how tackling wealth inequality requires action to spread wealth more widely at source, not just relying on taxation to redistribute it after the fact. A good example here would be taking action to ensure that farmers are paid more for their products in the first place (while distinguishing between family farms and the industrial farming lobby).

In the same report, we also looked at the importance of doing more to reduce the impact of wealth inequality on our society, economy, democracy and environment. Many European countries have high levels of wealth inequality, but strong public services and an effective social safety net limit the negative impacts of not owning wealth, and stringent regulations on lobbying and political funding (and soon media ownership) limit the extent to which the already wealthy can entrench their position. In contrast, the last week has shown once again just how much influence the wealthy have on the political and media agenda in Britain.

In tackling wealth inequality, the government needs to do more to differentiate between excessive, unearned wealth and the ‘ordinary wealth’ that millions of people legitimately enjoy or aspire to. Rising wealth inequality, and the chronic poverty and insecurity that accompany it, leads people to think of wealth in terms of security and not having to worry, as a guarantee of their children’s wellbeing in a hostile world. As a result they tend to react negatively to messaging about ‘bashing the rich’, but this is in part because the very wealthy are so good at presenting their interests as being in lockstep with those with more ordinary amounts of wealth, when the opposite is true. And some people need more wealth than others; farmers, for example, need to own land that is likely to have a high paper value in order to do their job. Realising the cash value of that land by selling up is not part of the plan. A more nuanced conversation about wealth and wealth inequality is long overdue.

Structural changes are also needed, alongside better messaging. In order to get at the roots of the problem, and reimagine the social contract - for farmers, for everyone - our political leaders have to break out of their short-term, siloed, reactive approach to policymaking. They can only shoulder so much of the blame for acting in this way; much of the problem lies with the underlying incentives and structures in the broader system (some of which we explored in a recent webinar with Sam Freedman). We need more cross-party working, more cross-government co-ordination, and more long-term thinking before we can have a sensible conversation that broadens the debate out from agricultural reliefs on inheritance tax to inheritance tax as a whole, and beyond that again to the entire tax system (building on the 2010 Mirrlees Review), and beyond even that to the broader social contract that underpins our society.

There are a few reforms that could be made now that would help to nudge us in this direction. Better regulating lobbying and media ownership would help, as mentioned above. So would legislation to force public bodies to consider the impact of policy on future generations, along the lines of what the Welsh government introduced almost a decade ago. Politics will and should always be about trade-offs, but these should be strategic and proactive decisions, not tactical moves deployed as and when the need arises.