Fund welfare concessions with inheritance tax U-turn, Rachel Reeves told

The concessions, which include protecting personal independence payments (Pip) for all existing claimants, mean the cuts are now likely to save much less than the £4.8bn the Government had expected.

Economists at the Institute for Fiscal Studies and the Resolution Foundation have both suggested the changes could reduce that figure by up to £3bn.

Farming groups have told Ms Reeves that making changes to the controversial inheritance tax reforms in the Budget, could raise almost £2bn for the Exchequer.

Research, commissioned by Family Business UK and conducted by independent consultancy CBI Economics, found the changes could hit Treasury revenue by £1.9bn and wipe £14.9bn from the UK economy.

Almost a quarter of family businesses and almost one in five family farms have cut jobs or paused recruitment since the Budget, with almost half pausing or cancelling investment.

Shadow Farming Minister Robbie Moore said: “If the Government are willing to change position on almost anything, to the tune of nearly £3bn, then why do they continue to doggedly pursue the family farm tax?

“The Government’s own figures suggest it will make £500m at most, independent research suggests it will lose money.”

The Chancellor’s proposals, which will come in next April, would introduce a 20 per cent inheritance tax rate on agricultural land and businesses worth more than £1m.

The plans have faced intense opposition from the sector, which says cash-poor, asset-rich farmers will be forced to sell their land.

The Yorkshire Post reported earlier in the week that 16,500 jobs could be lost in the region due to the changes, with a £1bn reduction in gross value added (GVA).

The Country Land and Business Association’s Jonathan Roberts said: “Rachel Reeves is going to have to find billions of pounds to fund the government's U-turn on welfare reform.

“We have an easy solution to help her find the cash - stop attacking family farms and businesses.

“As things stand, government's inheritance tax reforms will reduce tax revenue by £1.9bn and see 200,000 jobs lost. It is a policy she simply cannot afford to implement.”

While a National Farmers’ Union spokesperson said: “The Family Business UK survey shows only too clearly the catastrophic impacts on family farming businesses across Yorkshire of this government’s punitive Family Farm Tax.

“This report must serve as a wake-up call to Treasury, or we face major cuts to investment and significant job losses in the county.”

Both the NFU and the CLA are calling on the Government to use a ‘clawback mechanism’ to take inheritance tax, in a similar method to the winter fuel payment U-turn.

This would see tax applied at the full 40 per cent rate on inherited assets sold within a certain time period post-death if the proceeds are not reinvested into farming businesses.

Mr Roberts added: “It would allow rural and other family businesses to continue to make medium and long-term investment decisions, unlocking the stalled growth in business investment in the rural economy and keeping land in production.

“This plan would also target those who have bought land to shelter wealth for short-term gain.

“We implore Labour MPs across Yorkshire and beyond to work with farmers and small business owners, and publicly declare their opposition to government's disastrous policy.”