Why Labour MPs are starting to crack under pressure from farmers over inheritance tax

Budget votes and a majority of well over 150 in the House of Commons. Competence may not be the defining characteristic of Keir Starmer’s government but surely even Downing Street disaster merchant Morgan McSweeney would struggle to lose in these circumstances.

And yet somehow, as votes on the Budget came through on Tuesday, that mighty Labour majority appeared to mysteriously diminish. The first Budget resolution passed with a handsome 371 votes. By the time we reached the resolution on farm inheritance tax, however, that had dropped to a rather less impressive 327 – a bare majority.

The fact that so many Labour MPs felt the need to abstain on these resolutions should give you some indication of the pressure they are feeling from farmers and the wider rural community. This was the definition of a confidence vote in the Labour government – and yet dozens of their own MPs chose to walk away.

That is a bad sign for the government, but for anyone who has been following this campaign from the start, it should be no great surprise.

READ MORE: How the government has turned its back on Scotland's family farms

Farmers protest against changes to inheritance tax in Whitehall earlier this year (Picture: Henry Nicholls) | AFP via Getty Images

Anger like I’ve not seen in years

The reaction from rural communities to the proposed inheritance tax changes has been genuine and visceral. It has sparked a level of anger and political awareness among farmers of the sort that I have not seen in my almost quarter century as a parliamentarian.

If I am hearing this day by day as the chair of the Environment, Food and Rural Affairs Select Committee, you can only imagine the level of pressure that is being brought to bear on Labour MPs representing rural areas.

READ MORE: 'Sustained decline' in rural Scotland after 4.5 per cent drop in growth

This really matters to farmers. The impact of these tax changes is there to be seen in the wider rural economy even now, in declining confidence to invest. We have witnessed a steady drumbeat of agricultural merchants, suppliers and dealers shrinking operations or shutting up shop entirely – and that is before the tax changes have even been brought into force.

For now, decisions not to invest in new buildings, machinery and stock are made out of choice. Once the inheritance tax bills start to bite, they will be made out of necessity. The rural economy will suffer as a consequence.

READ MORE: ‘Government doesn't understand the impact IHT changes will have on farming families’ – warning from top expert

Compromise deal can be reached

This is all part of a pattern that has culminated in today’s farming backlash. For decades rural communities have felt slighted as we have seen power, money and influence hoarded ever more tightly in Whitehall and in Edinburgh. The gulf of understanding and respect between rural and urban communities has been allowed to grow.

It does not need to be like this. There are serious compromise tax proposals on the table that could protect family farms and tackle tax avoidance by the super-rich – while raising even more money for the Treasury.

Farmers know this, and because of their dogged campaigning, Labour MPs in rural areas know it as well – which is why so many of them refused to back the government on Tuesday night. That pressure has started to bite, and it is only going to grow from here.

Competence may not be the defining characteristic of Keir Starmer’s government but surely even they ought to learn when to cut their losses – and come out of this mess with their dignity intact.

Alistair Carmichael is the Scottish Liberal Democrat MP for Orkney and Shetland