Keir Starmer has hit back at Sir James Dyson after he hit out at Labour’s “spiteful” decision to impose inheritance tax on farmers.
The billionaire vacuum entrepreneur - whose farming business owns hundreds of millions of pounds worth of land across the UK - accused Rachel Reeves of imposing a “family death tax” on the sector.
The chancellor announced in last week’s Budget that farms worth more than £1 million would be subject to 20% inheritance tax when their owner dies.
Angry farmers have accused the prime minister of betrayal after he vowed to protect the agriculture sector before the election.
Writing in The Times, Dyson said: “Rachel Reeves is killing off established family businesses, and any incentive to start new ones, with her 20% Family Death Tax, levied each time a family business passes a generation.
“Every business expects to pay tax, but for Labour to kill off homegrown family businesses is a tragedy. In particular, I have huge empathy for the small businesses and start-ups that will suffer. Labour has shown its true colours with a spiteful Budget.”
But the prime minister’s official spokesman rejected Dyson’s assessment of the Budget.
He said the chancellor had had to take “tough choices” to clear up the financial mess left by the previous Tory government, but insisted she had adopted a “balanced approach”.
“The approach of this Budget was to be upfront and honest about the terrible state of the public finances that the government inherited,” he said.
The spokesman added: “Farmers rely on good public services too, including our NHS, our roads and schools.
“The Budget took tough decisions so we can invest in the public services that people expect.”
Meanwhile, a leading economist also hit out at those criticising the changes to inheritance tax rules.
Paul Johnson, director of the Institute for Fiscal Studies, said: “I’m afraid I have absolutely no sympathy with their arguments on inheritance tax and the impact on family farms and agriculture. This is special pleading by some extremely wealthy people.
“Very few farmers will be affected by this, for example. And in any case, if you think we should have an inheritance tax, and you may or may not think that, but if we have one, then really you do need to treat most things similarly.
“There’s no other country in Europe or hardly any others that completely exempt business assets and agricultural assets from inheritance tax. We never used to, didn’t destroy family farms. I’m disappointed actually to see such special pleading given such prominence.”
Rural affairs secretary Steve Reed and Treasury minister James Murray today met with Tom Bradshaw, president of the National Farmers Union, to hear his concerns about the Budget.
Speaking afterwards, Bradshaw said: “I have never seen the weight of support, the strength of feeling and anger that there is in this industry today. Many of them want to be militant.
Now we are not encouraging that in any way shape or form but government need to understand that there is a real strength of feeling behind what this change means for the future of family farming in this country.”