Reeves’s Marxist attack on family businesses has sealed her party’s fate

The Chancellor’s Budget horror show will surely make Labour unelectable across large swathes of Britain

It is no exaggeration to say that the decision to penalise families who have built up businesses – be they service companies, manufacturers of cutting-edge widgets or long-established farms – follows a classical Marxist approach.
The singling-out of particular groups, demonising or blaming them for a particular problem, then making them subject to punitive financial penalties – especially so they might lose their property – is a typical tactic of the far-Left. Marx and Engels never stopped writing about it.
Now, Labour’s Chancellor of the Exchequer is targeting families and property rights.
First it was 10 million pensioners losing their winter fuel allowance on the spurious grounds of needing to close a black hole in the public finances (that the Office for Budget Responsibility has not confirmed exists). But they are not alone.
Oil workers, steelworkers and coal miners have all seen their industries penalised by a Labour government, with onerous taxes and regulations so that businesses are closing and their jobs are being lost.
Last month, the isolated Chagossians were abandoned without consultation by a neo-colonial Labour government for a second time in 59 years – like some expendable imperialist flotsam that no one would notice.
And now it is the turn of family businesses. The consequences are going to be harsh and life-changing in ways that shall surely make Labour unelectable in large swathes of Britain.
Labour’s first Budget in 14 years has removed protections from inheritance tax that shielded family businesses, including the vast majority of family farms, severing the ability of families to build up a successful business and pass it on to their children and other family members.
Commenting on Rachel Reeves’s anti-family business Budget, Neil Davy, head of Family Business UK, captured it well by saying: “For all but the very smallest companies the changes to business property relief are much the same as scrapping it entirely.
“Far from raising money for the Exchequer, our research has shown that removing the reliefs will cost money – with a £29bn cut in economic activity and 391,000 jobs lost.”
This new tax burden on business is in addition to other ones, such as the big hike in employer’s National Insurance and the increase in the living wage. These burdens will bring real pain not just to the owners of Britain’s 4.8 million family businesses, but to many of their employees too, who will see wage increases suppressed and jobs lost.
The incentive to create and grow a family business with the aim of passing it on will be undermined significantly. Some 75pc of all UK businesses are family-run and employ over 50pc of all workers. Of the 1,551 largest companies in the UK, one in five (19.8pc) are family-owned – and most of these belong to UK families.
Davy also pointed out that, “Inheritance tax reliefs are not loopholes, they are legitimate tax policies introduced by a Labour government in 1976 to ensure businesses do not have to be broken up on the death of the owner, to the detriment of all the remaining employees, suppliers, customers, investors, the Treasury and wider economy.”
The fear among family business owners is tangible because the threat is so stark. Relatives already grieving over the loss of the head of a family will face the prospect of having to sell or break up loved businesses because they will not easily have available 20pc of its taxable value to pay HMRC.
If Labour’s finance bill is passed without amendment, any farm valued at more than £1m will see that additional value subject to inheritance tax at 20pc – catching an estimated 85pc of family farms.
With farmland valued at an average of £10,000 per acre, it will only take a 70-acre farm and its farmhouse to cross the threshold of £1m set by Reeves.
While land and property values vary across the country, the average UK farm is 217 acres – valuing the land alone at £2.17m. With the average UK house selling for approaching £300,000, it mean a by no means untypical total value of around £2.46m.
That would produce a sudden liability for a 20pc death tax of £293,220 – forcing families to sell the farms rather than be able to pass them down the line.
The beneficiaries of this policy will be large corporations, be they faceless farming conglomerates, property developers assembling their land banks, or – thanks to Labour’s permissible onshore – energy companies looking for locations to cultivate solar farms and wind turbines.
Farmers in particular can be forgiven for feeling duped by Labour.
While Sir Keir Starmer and Rachel Reeves point blank refused to say what they would do about capital gains tax, they did give farmers reassurance about not applying the death tax to family farms.
When asked whether Labour intended to get rid of agricultural property relief (APR) from inheritance tax, Steve Reed, then shadow environment secretary, replied: “We have no intention of changing APR”.
Labour lied to farmers and deserve to reap what they have sown.
Labour won in 114 rural constituencies – more than the Conservatives with 83 seats and the Liberal Democrats with 44 – but many of those Labour seats will now be at high risk when the next general election comes around.
Rural constituencies have close-knit communities where family, honesty and hard work are both cherished and honoured – and where politicians who break their promises will not easily be forgiven or forgotten.
Breaking the strength of the family, making people more dependent on the state, taking away personal independence and self-reliance by breaking the bonds of family property ownership have always been goals of Marxists, be it through social democracy or revolution – but who knew Reeves would be the one to deliver rural clearances across Britain?
The Reeves Halloween horror show will reverberate for the remainder of her tenure as Chancellor and beyond.
For now, with the OBR reducing its estimates for economic growth thanks to her Budget, the only promise she can be trusted to keep is her willingness to raise taxes again in the future.