Starmer faces fresh MP rebellion over farmers' inheritance tax

Telegraph

a day ago

Sir Keir Starmer is facing a fresh rebellion from Labour MPs over his inheritance tax raid on farmers.
The Telegraph understands that more than 40 MPs are considering mounting an attempt to water down the policy, which threatens to bankrupt family farms by landing them with large inheritance tax bills.
Rebels have been emboldened after forcing the Prime Minister to climb down on welfare cuts this week, in the third about-turn for the Government in two months.
The U-turns – on benefits, winter fuel payment cuts and a national inquiry into grooming gangs – have added to a £40 billion black hole Rachel Reeves, the Chancellor, needs to fill at the next Budget.
In a sign of fraying party discipline, MPs are plotting further rebellions on immigration and the two-child benefit cap, alongside the farming revolt.
A senior rebel told The Telegraph: 'It's obviously a Government in crisis and the back benches are feeling ignored. The whole strategy is not working and we've got to change direction.'
The fresh threats to Sir Keir's authority come after more than 100 MPs publicly broke with the Government over its disability benefit cuts, leading to a Number 10 climbdown this week.
Backbenchers are considering using rebel amendments to exempt small family farms from changes to inheritance tax announced in the October Budget.
Farmers have historically been able to pass down their land tax-free. But from April 2026, full tax relief will be capped for estates at £1 million, above which just 50 per cent tax relief will be available.
A so-called 'rural growth group' has proposed that ministers consider the impacts of substantially raising the planned £1 million cut-off point at which estates lose valuable tax reliefs.
The back-bench group has suggested estates receive full tax relief on the value of agricultural properties up to £10 million, 50 per cent to £20 million, and nil thereafter.
This higher threshold would probably exempt almost all small family farms from inheritance tax, with only the richest paying the levy.
The changes will be enacted in a Bill due to be voted on by MPs later this year, when they could be challenged by rebels.
Sam Rushworth, Labour MP for Bishop Auckland, who is a member of the group, said they would 'consider what amendments to put down'.
Mr Rushworth said: 'We are all keen to avoid amendments. I don't want it to get to that point. I am a Labour MP and I broadly support the Government, [but] I would like to see them bring forward different recommendations in the Bill.'
A handful of Labour parliamentarians have publicly criticised the so-called 'tractor tax' plans.
Markus Campbell-Savours, Labour MP for Penrith and Solway in Cumbria, a rural seat, said in December that he would vote against the Treasury's plans, telling the House of Commons: 'Let me be clear, if today was the real vote, I would vote against the Government's plans.'
Sir Keir is also facing opposition to some of his new immigration rules which are expected to be voted on after the summer break, The Telegraph understands.
Many of the immigration changes announced by the Prime Minister last month, including changes to visa routes, can be brought into effect without a vote in the House of Commons.
However key parts of the proposals, including a new levy on international student fees, will require the endorsement of Labour MPs.
A leading rebel told The Telegraph that the Government should spend the summer recess 'reflecting on an evidence-based approach as to how to build effective policies on immigration'.
Another said: 'The leadership have to seriously look at their actions on this policy regarding the lack of consultation with backbench MPs.'
A number of refugee charities have been lobbying parliamentarians over the changes after their repeated requests for meetings with Yvette Cooper, the Home Secretary, were turned down.
'Biggest mistake to date'
MPs opposed to the changes were encouraged this week by the Prime Minister's apology for using the term 'island of strangers' in his speech announcing the immigration changes.
One rebel Labour MP said: 'Of course it was right for the Prime Minister to apologise for the language that he used and understand the distress that it caused, but similarly, if the Government listened more on policy, this would be stronger'.
This week Sir Keir apologised for the language in the speech, saying he had not read it properly before delivery because he had been distressed by an arson attack on his family home.
But he gave no indication that the Government would U-turn on any of its immigration reforms.
Nigel Farage, the Reform UK leader, said the apology was Sir Keir's 'biggest mistake to date'.
He said: 'This is absolute proof that Keir Starmer has no beliefs, no principles and just reads from a script.
'Only a year into his premiership and he has already made his most fatal error. He has no intention of clamping down on immigration, both legal and illegal.
'This is his biggest mistake to date and one he will not be able to recover from – the public voted for change, instead they're being given more mass immigration and a spiralling crisis at the border.
'We need a leader that has vision and unwavering principles, that man is clearly not Keir Starmer.'
Some Labour MPs on the party's Right wing were bewildered by the Prime Minister's sudden apology.
One told The Telegraph 'that row-back is the most staggering of all' and said it would further erode discipline.
Labour MPs are also bracing for a fight with the Government in the autumn over the two child benefit cap, which many want to see scrapped.
The Prime Minister has reportedly committed to scrapping the cap but no announcement has yet been made.
In a speech next week, Kemi Badenoch is set to mock Sir Keir's growing roster of U-turns.
'Now that his backbenchers smell blood, there's almost certainly another climbdown on the two-child benefit cap in the offing,' she is expected to tell the Local Government Association on Wednesday.
'Labour told us 'the adults were back in charge', but this is actually amateur hour. The Prime Minister is incapable of sticking to a decision.'
A senior Labour party figure said that Downing Street's loss of control over MPs constituted 'an absolute s--- show'.
The source said: 'This is an outburst beyond the welfare bill that has broken out. It is from loyal, moderate people who have defended the winter fuel cut for months and then had the rug pulled from under them with the U-turn.
'These are moderate MPs getting constant lobbying from disabled groups and constituents and now they've been told there is money available after all. Those frustrations are largely with Rachel. But they're also with No 10.'
'Now they have lost their patience. It's an absolute s--- show.'
Labour MPs have described the past week as a 'deep crisis' with senior government figures forming 'circular firing squads'.
One Labour MP said of the Chancellor: 'It's already clear that Rachel Reeves has lost because her whole economic and fiscal strategy is failing on numerous counts. The PM is reversing everything that she wanted to do.'
A Government spokesman said: 'Our reforms to agricultural and business property relief are vital to fix the public services we all rely on.
'Three quarters of estates will continue to pay no inheritance tax at all, while the remaining quarter will pay half the inheritance tax that most people pay, and payments can be spread over 10 years, interest-free.
'We're investing billions of pounds in sustainable food production and nature's recovery, slashing costs for food producers to export to the EU and have appointed former NFU president Baroness Minette Batters to advise on reforms to boost farmers profits.'