Family farms in Wales are under threat because of the UK Labour government’s Budget, opposition groups in the Senedd have said.

The Welsh First Minister Eluned Morgan was forced to defend the plans – which includes fresh inheritance tax measures for farmers – during First Minister’s Questions on Tuesday.

Opposition groups in the Senedd lined up to criticise the policy, warning it could “threaten” farms across the country and branded the Budget a “brutal betrayal”.

But Baroness Morgan said there had been “a lot of noise” about the policy, and insisted the “vast majority of farms will not have to pay”.

Under the plans, inheritance tax will be charged at 20% on farms worth more than £1 million, although Chancellor Rachel Reeves has said that in some cases the threshold could in practice be about £3 million.

Welsh First Ministers Question
Eluned Morgan during First Ministers Questions (Mark Lewis/Huw Evans Agency/Senedd Commission)

The move has sparked considerable backlash in the farming industry, with disputes over how many businesses would be affected.

It also comes after agricultural families in Wales held mass protests outside the Welsh Parliament earlier this year over planned changes for grant funding to farmers, with some fearing it could put them out of business.

Following the backlash, the Welsh government delayed the “sustainable farming scheme” (SFS) grant changes.

Plaid Cymru’s deputy leader, Delyth Jewell, said farmers felt “betrayed” by the Budget while speaking at FMQs.

She said: “Despite the promise that Labour wouldn’t change the inheritance tax rules on agriculture, that is exactly what’s happened.

“It’s little wonder that farmers are feeling betrayed because this new policy threatens the future of many Welsh family farms.”

She argued the policy should not be taken in isolation, with farmers suffering increased costs, bovine TB infections and uncertainty over the SFS.

“They are all taking their toll financially and emotionally,” she said, “It’s an industry in Wales made up of families, many of whom are struggling.”

Ms Jewell said there was also no commitment to fair funding for Wales, no mention of additional HS2 funding in the Budget and accusing the UK government of continuing with austerity.

Welsh Conservatives leader Andrew RT Davies branded it a “Budget of broken promises and brutal betrayal”.

Vaughan Gething stepping down
Leader of the Welsh Conservatives Andrew RT Davies standing outside the Senedd (Geoff Caddick/PA)

He argued the Prime Minister had previously promised there were no plans to change agricultural property relief, and the move would bring “anger, concern and fear”.

The First Minister said the Welsh government’s “initial assessment is that the vast majority of farms in Wales will not have to pay” and insisted there had been “a lot of noise” surrounding the policy.

“The vast majority of farms in Wales will not have to pay this tax,” Baroness Morgan said.

“The fact is that the rest of the population have to pay inheritance tax, and there is a huge allowance when it comes to the agricultural community.

“What we’re talking about here is extremely large and wealthy farms, and obviously, we will work through the details of this.”

She insisted Labour was interested in making sure there was support for people who work on farms, calling the increase to the living wage “significant”.

She also said the Chancellor had announced an extra £1.7 billion for Wales in the Budget, which would “help to rebuild our public services” and insisted “austerity has ended”.