Most Guardian or Observer articles deserve little more than a condescending eyeroll. Some, however, manage to hit that sweet spot of being both egregiously wrong and aggressively smug, and deserve to be met with proportionate response. Will Hutton’s latest piece, entitled “Farmers have hoarded land for too long. Inheritance tax will bring new life to rural Britain”, meets such standards. 

Hutton’s goal is to defend the changes to how inheritance tax is applied to farms with farms worth more than £1 million now being hit with an effective tax rate of 20 per cent on assets above the threshold. With the Treasury claiming this will only affect 500 farmers, you would be forgiven for thinking this tax is marginal to society. But this is misinformation on a scale worthy of a select committee enquiry.

First and foremost, the threshold at which this tax kicks in — £2m, if we’re being charitable and assuming that exemptions for husbands’ and wives’ ownership are followed — typically applies to farms of 177 acres, or 72 hectares. This figure is based on the average agricultural land value of an acre, currently at ~£11,300, though of course this varies across the country. Nevertheless, averages are averages, and the average farm size in England is 88ha; just 217 acres.

Mr Hutton … begins with a warped conception of what farming is and the role it plays in society

This means that the tax does not apply to a small group of “hoarders”, but instead to a significant proportion of farms. The average farm will, therefore, be above the tax threshold. What is even more counter-intuitive is, given this Government’s emphasis on environmentalism and ecologism, it seems odd to encourage the break up of large farms (seemingly the goal of this measure) which are more efficient, environmentally-conscious and profitable. No wonder farmers are incensed. 

Yet Mr Hutton, claiming to counter the “one-sided hysteria”, as he puts it, begins with a warped conception of what farming is and the role it plays in society. Rather than recognising that farmers help to keep the nation fed and clothed and the countryside beautiful, Hutton elides them all instantly with “the rich”, his first sentence claiming that “the conversation about what constitutes the good society is framed by the rich and their interests.” The obvious bias of this sentence aside, I’m sure the majority of farmers, who struggle to make a living, would be surprised to find themselves put amongst the rich. 

But Hutton’s strange claims do not stop there. They actually accelerate into a fairy tale land where the rich are greedily hoarding swathes of Britain’s countryside to keep everyone else underfed, and this new tax is a method through which such an injustice can be corrected. 

Should this injustice be addressed, Hutton thinks, it will free up the land for the ambitious youth to purchase and start farms. He claims that “young farmers, now increasingly crowded out of the market, will get a chance to buy land: there is the prospect of a levelling off, even a fall, in farm rents.” Sadly, we are not 1810s America, with a continent of unconquered wilderness ready to be settled by young families and turned from untamed meadows into profitable land. We are an already-cramped island dealing with rocketing land prices, driven up by compounding anti-farming measures such as re-wilding, re-forestation and biodiversity drives. The capacity for younger people to buy and start farms is practically zero, and would remain so after this tax change.

A 2018 DEFRA report found that, “in England in 2016, a small number of economically large farms (7%) produced over half (55%) the agricultural output”. Whilst this does not mean that the largest 7% of farms are the most profitable, because they may have very high costs alongside their high revenues, there is a very real possibility this new tax will damage some of our most productive farms.

Moreover, the same report found that, crucially, “16% of farms made a loss”. Given that 13% of farms in England are 5ha or smaller, we can reasonably assume that anywhere between 5 and 8 hectares is generally too small for a farm to be profitable. If we’re going to work with the low-end estimates, for a farm to be a commercially viable business it should be 10ha or more (25 acres, rounding up). That puts the land price in England at, on average, £279,100; a little bit below the typical house price of £310,000.

Starting a farm, for an entrepreneurial young person, simply has too many and too high barriers to entry to be viable

But getting a loan or a mortgage to start a farm is not as straightforward as getting one for a house. While a bank is primarily concerned with whether you can afford the deposit as well as keep up the monthly payments for a house, when it comes to a farm, there are more hurdles to jump: industry experience and relevant knowledge; a reliable business plan that projects several years into the future, as well as proof of sound finances from previous years; and so on. Not only this, but the typical Loan-To-Value cap is 70 per cent — well below the 90 per cent average for a house. 

Starting a farm, for an entrepreneurial young person, simply has too many and too high barriers to entry to be viable — and this tax will not address this issue. Factoring in the land price, and rounding to £100,000 as a minimum deposit (not purchase price) for a small commercial “starter farm”, there are then the equipment costs. The most common tractors on the market are Claas, Massey Ferguson, John Deere or Fendt, and if we’re being charitable and saying that only a small tractor will be needed for such a small farm, a used Massey Ferguson will set you back £25,000 at the low end. It is nearly £200,000 for a top-end, pre-owned John Deere tractor. Depending on the farm type (livestock or arable), the equipment needed might include rotavators, ploughs, trailers, harvesters, loaders, and a whole panoply more. That’s if you’re planning to buy in; realistically, you might be renting. 

Put simply, Land Workers’ Alliance estimates it will cost £50,000-£250,000 to start a farm before land and housing costs. I think we can reasonably estimate that it will cost half a million before the farm gets going. Given that the simple threshold for this tax is £1m, there will be a very narrow space between a commercially viable farm. and one punished by this tax. That’s not even considering that this is a tax on assets, which includes equipment, vehicles, livestock, seed, buildings, and everything necessary for the farm to exist.

So not only will this tax squeeze medium sized farms out of existence, but it will also reinforce the already high barriers to starting a farm faced by ambitious young people. Realistically, anyone looking to buy land in Britain will need one of two things: either existing available capital of a sufficient size, which usually means the well-off that Labour’s other taxes target and harm; or Government subsidies. But these subsidies are so designed that they will only ever encourage rewilding projects that prevent those farms from being commercially viable enterprises, turning the countryside into an enormous zoo, as well as making them state-sponsored (and controlled) businesses. This seems to be the Government’s vision for farming: a carousel of spiteful taxes and counterproductive subsidies. The farmers demonstrating in Westminster are right to be worried about the future.