Rachel Reeves Hit by Labour Rural Rebellion Over Inheritance Tax on Farmers

Chancellor Rachel Reeves Faced Rural Backlash Over Inheritance Tax

Rachel Reeves, Chancellor of the Exchequer, has faced a significant challenge from her own party after a group of Labour MPs in rural constituencies rejected the government’s plans to introduce a 20% inheritance tax on farm estates worth over £1 million. The rebellion emerged during the final day of the Commons debate on the budget, where plans to impose this controversial measure were met with vocal opposition.

Controversial Proposal and Rural Protests

The proposed policy aims to target large farm estates with an inheritance tax rate of 20%, effective from April next year. This has sparked widespread protests among farmers who fear the measure could force small farms into selling, citing concerns over enormous unexpected tax bills. The NFU, representing the interests of UK farmers, has been at the forefront of these protests, urging MPs to reconsider the policy’s impact.

Labour MPs’ Response and Voting Breakdown

During the debate, Labour backbenchers demanded a U-turn on the inheritance tax proposal. While most Labour MPs voted in favor, several abstained from voting or took an opposing stance. Notably, borders MP Markus Campbell-Savours was one of the few to vote against the measure.

The NFU had previously called on Labour MPs to abstain, stating that their support could help demonstrate a need for policy change.

“To Labour MPs: We ask you to abstain on Budget Resolution 50,” read an NFU statement. “With your help, we can show the government there is still time to get it right on the family farm tax. A policy with such cruel human costs demands change. Now is the time to stand up for the farmers you represent.” Following the vote, NFU President Tom Brhaw emphasized that the support of rural Labour MPs was crucial in delivering a message to the government.

Labour’s Slumped Support and Future Implications

The voting pattern reflected a significant shift within the party. The fifth out of seven budget resolutions saw Labour’s vote drop from 371 in the first tax change debate, down by 44 votes to 327. This mini-mutiny follows a broader rebellion among newly elected rural MPs who are showing their willingness to challenge government policies.

Speaking earlier during the debate, Campbell-Savours expressed deep concerns about the proposed changes to agricultural property relief (APR), particularly those affecting elderly farmers who may not have made arrangements to transfer assets.

He highlighted how many farmers live on tiny profit margins and face unexpected tax bills that could devastate their farms.

In a similar vein, Labour MP Samantha Niblett from South Derbyshire abstained after urging the government to reconsider APR inheritance tax. She pointed out that most farmers are not wealthy land barons but struggle with marginal profits. “We must acknowledge a difficult truth: we have lost the trust of our farmers, and they deserve our utmost respect, honesty, and unwavering support,” she stated.

Other Labour MPs who abstained or did not vote included Tonia Antoniazzi (Gower), Julia Buckley (Shrewsbury), Jonathan Davies (Mid Derbyshire), Maya Ellis (Ribble Valley), and Anna Gelderd (South East Cornwall). Ben Goldsborough (South Norfolk) also abstained, while Alison Hume (Scarborough and Whitby), Terry Jermy (South West Norfolk), Jayne Kirkham (Truro and Falmouth), Noah Law (St Austell and Newquay), Perran Moon (Camborne and Redruth), Jenny Riddell-Carpenter (Suffolk Coastal), Henry Tufnell (Mid and South Pembrokeshire), John Whitby (Derbyshire Dales), Steve Witherden (Montgomeryshire and Glyndwr), and Amanda Hack (North West Leicestershire) did not vote.

The government comfortably won the vote by 327-182, a majority of 145.

However, this mini-mutiny serves as a clear indication that newly elected Labour MPs from rural areas are prepared to challenge the party’s stance on policies affecting their constituents. Chancellor Reeves and her team will need to carefully consider these developments as they navigate future budget debates.

For more updates and detailed analysis, stay tuned to Sky News.