The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, I thank the noble Baroness, Lady Northover, for securing this important debate and all noble Lords who have taken part and made their contributions. I welcome the opportunity to speak further about the central role that family farms have in this country.
I know that the noble Baroness comes from a farming family—she has expressed that on many occasions—and that this is a subject very close to her heart. She has spoken before about the number of challenges that upland farmers face. As a resident in Cumbria and the niece of an upland farmer, I completely understand the points that she makes in this area.
The Government’s commitment to British farmers, including family farms, remains steadfast. We must not forget that farmers are the beating heart of our great country. Farming and food security are the foundations of a healthy and resilient economy, the local community and the environment, and it is the hard work of this country’s farmers that puts food on our tables and stewards our beautiful countryside.
I know that many farmers have found recent years very challenging. They have faced down major issues, such as the coronavirus pandemic. They have been struggling with extreme weather events, such as flooding, and huge rises in energy costs. They have been undermined by damaging trade deals and have endured poor harvests. I know how low farmer confidence has become as a consequence of these challenges, and that is why the Government want to restore stability and confidence in the sector.
Clearly, the APR announcement has been met with great concern in some quarters, but I also draw attention to the fact that, in the Budget announced last month, the Government committed £5 billion to the farming budget over two years, including more money than ever for sustainable food production. This enables us to keep momentum on the path to a more resilient and sustainable farming sector. Environmental land management schemes will remain at the centre of our offer for farmers and nature, receiving £1.8 billion for the financial year 2025-26.
Our three ELM schemes—the Sustainable Farming Incentive, Countryside Stewardship higher tier and Landscape Recovery—are all continuing. We now have over 67,000 live agreements across all our agri-environment schemes, including 24,500 Sustainable Farming Incentive and 35,100 Countryside Stewardship agreements. This enables thousands of farmers to be supported to produce food and support the environment. There are 56 Landscape Recovery projects, covering over 240,000 hectares.
In order to focus investment on ELM schemes and achieve that more resilient and sustainable farming sector, the Government are accelerating the end of the era of payouts to large and wealthy landowners simply for owning land. The fastest reductions in subsidies will be to those who historically received the largest payments. For example, the 4% who received more than £100,000 in subsidies in 2020 will receive no more than £8,000 in 2025. The majority of farmers, who received less than £10,000 to start with, will continue to see a gradual reduction in their delinked payments but will have ongoing access to funding through SFI and other schemes, which offer funding streams for farmers who have often been ignored, such as small, grassland, upland and tenant farmers.
Tenant farmers have been mentioned on a number of occasions, and I remind noble Lords that we have announced a commissioner for tenant farmers to work to support them in their endeavours.
What is more, the Government have announced that they will rapidly release £60 million through the Farming Recovery Fund. This will support farmers, including those operating family farms, who were affected by unprecedented extreme wet weather last winter. Around 13,000 farm businesses, including family farms, will receive an exceptional, one-off payment to help with severe flooding. The Government are also investing £208 million so they can protect the nation from disease outbreaks that threaten the industry, food security and human health.
We will continue funding the Farming Community Network to support tuberculosis-affected communities by putting in place a three-year contract, starting from 1 December this year. The support, which began in 2009, provides TB-affected farmers and their families with a national, free-to-access business and pastoral advice service.
I absolutely recognise that farmers face challenges on many fronts, and we will do everything we can to safeguard the mental health of people working in the sector. Access to mental health support can be very important to farming families, who can often find themselves isolated and sometimes struggle to ask for help. The Government are working to improve mental health and access to services. I pay tribute to all those who work to raise awareness of these issues and encourage farming families who are struggling to reach out for help.
All this support forms just part of the Government’s new deal for farmers. Besides these measures, the Government are working to cut red tape at our borders and get British food exports moving again, and to protect farmers from being undercut by trade deals. The Government will lower energy bills for farmers by switching on GB Energy; introduce grid reform to allow farmers to plug their renewable energy into the National Grid; use their own purchasing power to back British food, so that 50% of food bought in hospitals, army bases and prisons is locally produced or certified to high environmental standards; introduce a land use framework which balances long-term food security and nature recovery; introduce the first ever cross-government rural crime strategy to crack down on antisocial behaviour, fly-tipping and GPS theft; and set up a new British infrastructure council to steer private investment in rural areas, including broadband rollout in our rural communities.
I turn to the points raised in the debate. The noble Lord, Lord Herbert of South Downs, asked, as did others, why the Secretary of State said when in opposition that he did not expect the inheritance tax situation to change. Unfortunately, the Government have had to take tough decisions on tax, and on welfare and spending, to fix the foundations and deliver change, including a series of decisions on tax that protect the payslips of working people. This has been possible only by making changes to a number of taxes, such as agricultural property relief, which was previously available on all agricultural properties at a rate of 100%.
I appreciate the real disappointment felt by the noble Baroness and others in the Chamber at these changes, and I assure noble Lords that the measures have been designed to protect small farms. We know, as we have heard, that the current rules have been used by wealthy landowners to avoid inheritance tax. Currently, the largest estates pay a lower effective inheritance tax rate than smaller estates. The latest figures show that the top 7%—the largest 117 claims—account for 40% of the total value of agricultural property relief. This costs the taxpayer £290 million. The top 2% of claims—which is 37 claims—account for 22% of agricultural property relief, costing £190 million.
I understand the point raised by the right reverend Prelate the Bishop of St Albans—that that there has been a great deal of discrepancy in the figures. Our figures are based on actual claims for APR and show that around three-quarters of claims each year are expected to be unaffected by the changes. Looking at asset value alone does not necessarily mean that the farm will be impacted, as it depends on individual circumstances. If anybody wants to look at the figures in more detail, they are available to view online and have been assessed by the independent OBR.
We do not think the current situation is fair or sustainable, which is why we have been making changes to ensure that larger estates contribute more than smaller ones. But we want to safeguard small family farms while also fixing the public services those same families rely on, so that they can pass the family farm down to their children just as previous generations have always done.
The Question specifically refers to the continuity of farming families. An issue that needs to be addressed is succession. The noble Earl, Lord Shrewsbury, mentioned it, although it was not generally brought up in the debate. Succession is a really important point, which is why we need to make farming a much more attractive business for people to move into. This has been the case for many years, and I am pleased that we are starting to talk about this within Defra and in government, with a long-term strategy for farming. For example, when my uncle wanted to retire, nobody from my generation wanted to take the farm on. We had seen how hard he had worked as a hill sheep farmer. We had seen that he worked part-time as a mechanic at the local garage to try to make ends meet. It simply was not attractive enough for us to decide that that was where we wanted to invest our future. Among the many discussions we have had on this, if we are going to secure family farms for the future, we need to make farming more attractive for new people who want to come into farming. The noble Earl also made a very important point about council farms, which have been sold off far too frequently. I wanted to make that point before I close, because it is important.
The noble Baroness asked whether the Chancellor of the Exchequer had met with the NFU. I can tell her that earlier this week, both Defra and Treasury officials met with farming sector representatives to look at this.
We recognise the valuable role that farming families serve in this country, and we are committed to working with farmers to enable the vast majority to pass the family farm down to their children. The new deal for farmers, and other support announced at the Budget, will support that.
I would like to make a final point. In opening the CLA’s rural conference, the Secretary of State for Defra said that he wants to listen in order to understand how government can make these changes easier to bear. I support him in that, and my door is open to anyone who would like to come and discuss this with me.