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Sir Geoffrey Cox (Torridge and Tavistock) (Con)
I beg to move,
That this House has considered family farming in Devon.
It is a great pleasure to have been able to secure a debate under your presidency, Sir Mark. I am extremely grateful to the Minister for attending.
With exquisite timing, the Conservative party has managed to list an Opposition day motion in the main Chamber tomorrow on exactly the same subject as this debate. Although I welcome that, I also welcome the opportunity of having the Minister much more up close and personal than is normally possible in the main Chamber for what I hope will be a relatively civilised debate—we do not always manage that in the main Chamber, perhaps, although one would hope we would. We are here to discuss not the general questions affecting the entire country in connection with farming, but questions most specific to Devon, although they share common themes and subjects.
I forget whether I have yet been able to induce the Minister to visit Devon, but we hope that he will do so in the new year because we are likely to have a Dartmoor forum, which he and I have already spoken about, in connection with an important development for the management of Dartmoor—the Fursdon review and its implementation. I will speak of those in due course.
To set the scene, in 2022 the economic output of farming in Devon was valued at £1.369 billion. More than 20,000 people are employed in farming in Devon on more than 1.2 million acres of farmland. By far the largest proportion of those acres are held and worked by modest-sized family farms of between two and 400 acres. No farming families in Devon continue in farming to grow rich; Devon’s farms are principally grazing livestock and dairy farms. They do it because it is a way of life, and because of the pride that they take in producing some of the finest food and produce on the planet.
Those families also do it because many, even most, of them have farmed in that place and within those communities for generations. The names of their forebears, engraved on the tombstones of their churches and chapels, bear witness to the continuity of which they are the stewards and custodians. It is that value, which is precious to the entire rural fabric of Devonshire, that I will speak of most acutely and strongly to the Minister.
There is a preciousness about farms, many of which have herds that may have been looked after and developed over dozens of years, sometimes even a century. There is all that cultivation and nurture and all those traditions that those farming families represent. Often a farm will support not simply one family, but several; I know of many surrounding my home. I refer the House to my entry in the Register of Members’ Financial Interests—although I do not farm, I have farmland in Devon, and, depending on the vagaries of the sustainable farming incentive, I may well be a beneficiary of those schemes in a modest way. I tell that to the House and the Minister in candour before I start substantively.
I am familiar with my neighbours, my friends—those who farm near me, around me and throughout the whole of Torridge and Tavistock, which I have the honour to represent. As I have said, those farms sometimes sustain not just one family but several: there may be two or three brothers, with their families. Children on those farms may be hoping in due course to have the opportunity of farming themselves.
These people do not farm to grow rich; they farm for the reasons that I have given. But they also farm because they love that way of life—they have grown used to it, and know that they are following in the footsteps of their forebears. They farm because they are proud of the produce and the animals that they rear.
That is why there is a special value in farming families and family farms in Devon. True it is that the produce is the most important thing, of which they are most proud, but they also contribute to the fabric. The Minister would love to come to the rural shows—the Clovelly show, the Okehampton show, the Holsworthy show and all the shows that take place throughout the summer months in Devon. They are extraordinary events at which people—not just the farmers, but the ancillary trades that depend on them—get together. In a convivial setting they discuss their industry and trade and create the fabric of rural life, which is so precious.
Farm incomes have been falling. That is not a secret—the Minister will be well aware of the fact. From time to time, fortunately, farmgate prices have remained relatively buoyant, but average farm business income for the year 2023-24, to the end of February 2024, was lower for all farm types except specialist pig farms and specialist poultry farms. Almost all the farms in Devon, bar those relatively rare exceptions, saw falling average business income.
On dairy farms, following the two better years, when farmgate prices were relatively buoyant, average farm business income was 68% lower, with a fall in the farmgate price of milk being the primary driver. On lowland grazing livestock farms—beef, sheep—average farm business income fell by nearly a quarter, to £17,300. For grazing livestock farms in less favoured areas, higher fixed costs were only partially offset by an increase in output of £23,500, which was 12% lower.
From those falling incomes must be deducted the living of those who work the land. Those incomes do not take into account the unpaid labour of those who own or tenant those farms. Families who live on them—sometimes several families—must from that £17,300 or £23,500 take their own living. We can see that most people would not regard the figures we are speaking about, falling as they have been in the last year or more, as easy to live on, particularly for more than one person, for multiple families.
These farming families, of course, have to live with not only the hardness of their way of life but the unpredictability of the weather. They also, sadly, live with a different kind of unpredictability and a different kind of weather: the political weather. I would not be exaggerating if I said that these days those farmers in my constituency, and I suspect it is not much different in the rest of the county, probably regard the political weather as even more random and unpredictable than the actual weather itself.
I mean no party political point, because I accept entirely that the weather under successive Governments has always been relatively unpredictable, but recently the weather has achieved a combination that could be described, without too much poetic hyperbole, as a perfect storm. We have had the Budget’s accelerated cuts to the basic farm payment, the delinked payments. It is true that the progressive reduction to the basic payment was introduced in 2021. It is perfectly true that, across all farm types, the average net payment received in the reference year 2023-24 was approximately £18,300—but that was 21% lower than the year 2022-23. Nevertheless, that average of £18,300 still accounted on average for 40% of farm business income.
In the meantime, the environmental land management scheme, which includes the sustainable farming incentive, is not replacing the income lost to farms. Considerable progress was made this year to improve those schemes under the last Government, but, while across all farm types net income from agri-environment activities increased by an average of 14% to £10,600 on average, which is welcome, that is by no means sufficient to replace the 40% of farm business income that the basic farm payment still comprised in the year 2023-24.
As a result of this Budget, family farms will now experience a further 76% cut this year in the delinked or basic payment, with a cap of £7,200. For many families, that will represent a dramatic and unexpected reduction, for which farm businesses have been able to plan, and which will require readjustment and inevitable retrenchment of investment and employment. The payments will, of course —as they were always intended to—reduce progressively over the next three years, but farmers were entitled to believe that they would be reduced proportionately. Instead, the Chancellor of the Exchequer has reduced them by 76% against the reference year, in a manner wholly unexpected to the industry.
Cumulatively, I will describe the additional problems that that has meant. There has been an inability to plan and an inability to adjust one’s cash flow. Halfway through potential investments on their farm, farmers find that the income they expected to have is not the income they will have. That is unhelpful. At the same time, the countryside stewardship higher tier scheme has been postponed, it is said possibly until mid-2025—I would invite the Minister to give us his view on when that scheme will be available.
The new, expanded sustainable farming incentive for 2024 does not appear to be readily available to all farmers, particularly to upland farmers, who have had so far very little access to that scheme. The countryside stewardship higher tier and the SFI 24, with the activities that are now coming onstream—or that will do, because I understand that some of the endorsed activities are still not ready—offered some prospect of mitigating the dramatic losses that the Budget has imposed, but the postponement has been a serious blow. Farmers are marooned in legacy schemes that are being extended in mirror agreements and cannot conceivably make up or mitigate the loss of direct payments that they are suffering because of the unexpected reductions.
The Ministry has also suddenly halted capital grants. The sudden closure of the capital grant applications has been a huge shock. Farmers are being asked to adopt measures to improve the environment, but have been left without access to the very grant schemes that would enable them to do so and help with their cash flow and their productivity. With applications timed specifically to fit in with the farming year and their enterprise activities, and no confirmation that all applications already in the system will progress, further uncertainty is caused to these businesses. Will the Minister comment on that?
The Minister for Food Security and Rural Affairs (Daniel Zeichner)
indicated dissent.
Sir Geoffrey Cox
I saw him, in his characteristically civil and polite way, gently shake his head. Nothing would more alight the hopes of those I represent than if that gentle shake of the head meant something—meant that we were wrong to say that the capital grants had been ceased and meant that all those writing to me and colleagues, asking what to do now, have been living in an unnecessary nightmare.
I implore the Minister, if that gentle shake of the head meant anything, to let us hear it now. Let us hear him boldly strike out and say, “The capital grants will be resumed. They will not be postponed or delayed to 2025. Some relief is available to those who desperately need it.” Because they—the farming families of whom I speak—will also be affected by the increases in employer national insurance contributions and the minimum wage, and by the various measures, some quite small, that the Budget took in connection with those who pursue family farming.
In the meantime, like a slow and steady drumbeat gathering force, behind the ever more implausible rhetoric of support, they see and hear the concrete commitments of this Government. They witness the Government in action, not in words. They see how the Prime Minister at COP29 committed himself to a climate change target—a perfectly reasonable thing, some may argue, but the Climate Change Committee has told him that in committing to that target he will need to reduce the consumption of meat and dairy products by 20% over the coming five years.
These are the signs of the political weather, and so are the small measures—the small signs that, beyond the talk, indicate the revealed preferences and priorities of a Government. It is not about what the Prime Minister says when he stands at the podium and speaks to the National Farmers Union; we have already learned that we cannot trust that. What we realise, and what those listening today have begun to realise, is that it is in the small as well as the large measures that the Government are revealing their visceral and real preferences and priorities.
The small things include the reclassification of double-cab pick-up trucks. That might even have been missed in the Budget. Squirrelled away in the small print was a lancet aimed straight at hundreds of farming families in Devon, many of whom have a double-cab pick-up truck. Now, that is no longer deductible: it is not to be treated as a business expense simply because it has a back seat, when for years it has been so treated by the Revenue. The small measures reveal the real preferences and priorities of a Government. It is not the words, the rhetoric or the talk; it is what they do by which they are judged.
Of course, all those measures are outweighed by far by the subject that tomorrow’s debate will no doubt cover: agricultural and business property relief. The Government’s figures on the policy have now been widely discredited. The £1 million cap is not only on agricultural property relief but on business property relief. Both reliefs are used when a farm is passed to the next generation. As agricultural land prices have increased, a 200-acre farm, let alone a 400-acre farm, will almost certainly have a capital value, on the land alone, of more than £2 million. That same land often sustains multiple families—the brothers, the sisters and the cousins, all of whom farm that land—and from that exiguous amount of £17,300, or £23,500 in an upland area, they all have to take their living, provide for their children, pay for their energy and so on.
These farms are not wealthy; they are, as is so often said, asset-rich but income-poor. The Government say that the relief is doubled for a couple. However, bear in mind that a farm will have not just the land but other business assets, equipment and livestock, all of which require the business property relief to be deployed. And the business property relief, combined with the agricultural property relief, is now capped at £1 million.
As I said, the Government say the relief is doubled for a couple. But what about the 46% of farms that are owned by a single owner? If, for example, someone’s spouse has already died, they cannot inherit the allowance from their deceased husband or wife. The 46% of single owners of farms will receive no double relief—only the £1 million.
I say to the Minister that what is particularly wrong about this situation is—
The Minister for Food Security and Rural Affairs (Daniel Zeichner)
It is always a pleasure to serve when you are in the Chair, Sir Mark. I thank the right hon. and learned Member for Torridge and Tavistock (Sir Geoffrey Cox) for bringing this debate in his characteristically forceful way. He seduces; he charms; he flatters. I particularly enjoyed his account of the centuries it has taken to produce the wonderful farms we see in Devon—centuries, of course, that preceded the current agricultural property relief regulations. I also enjoyed his account of the weather that the previous Government created, which left the farming sector in such a parlous state for the new Government to inherit. But he also encouraged me to visit Devon, and I can tell him that, actually, within my first 10 days of being appointed as Minister I had made my way to Devon, as I had done in opposition on a number of occasions, and thoroughly enjoyed it.
However, I also frequently heard from local people that they were concerned about others coming to buy up land over the top of local people. I suspect that we can share our concerns on some of these issues. The right hon. and learned Gentleman referenced the excellent debate that he secured in this Chamber last year on the future of Dartmoor, which I will come on to.
Many important points have been raised, and I have listened carefully to all the thoughtful contributions. I was particularly struck by the comments of the hon. Member for South West Devon (Rebecca Smith). I will go away and look carefully at her points about the moorland stocking rates, which I know my officials are looking at closely, and how they affect Greenwell farm. I always listen closely to the hon. Member for Strangford (Jim Shannon), and the hon. Member for Honiton and Sidmouth (Richard Foord) also made important points. I was struck by the points made by the hon. Member for Winchester (Dr Chambers), particularly around border controls. I remind him that one of the first things we did was to strengthen those controls, so I very much agree with him about threats at the borders.
We absolutely recognise that the farming sector is vital. Family farms are crucial: they produce our food, steward the environment and look after nature. We are all indebted to farmers across this country for doing that, and we all recognise the stresses and strains, the mental health challenges, which the hon. Member for Winchester mentioned, and the pressures from the weather and from disease in the last few years. That is why this Government are investing £5 billion into farming over the next two years—the largest amount ever directed towards sustainable food production, rural economic growth and the recovery of nature in our country’s history. That should send a powerful message to farmers about the value we place on all that they do. Within that, we have committed £1.8 billion for environmental land management schemes, delivering improvements to food security and biodiversity, tackling carbon emissions and improving water quality, air quality and flood resilience.
I will address the point about basic payments made at the beginning by the right hon. and learned Member for Torridge and Tavistock. He is right: we are accelerating the end of the era of payouts to landowners simply for owning land, and the fastest reductions in subsidies will be for those who have historically received the largest payments. For example, it is true that the 4% who received more than £100,000 in subsidies in 2020 will receive no more than £8,000 in 2025, whereas the majority of farmers who receive less than £10,000 to start with will see a gradual reduction in their delinked payments, but they will all have access to ongoing funding through SFI and other schemes. That is the key point. We are speeding up that vital transition, which I fully recognise the previous Government set about initially, to get to a better place in terms of the environment.
The issue of capital grants is interesting, because I must tell the Opposition that there is no magic money tree. The reason why the capital grants have stopped is that they are oversubscribed. We have seen an unprecedented demand this autumn. The Rural Payments Agency received more applications for capital grants from May to November 2024 than over the whole of the 2023-24 financial year. They are also worth more—as of November ’24, the standalone capital grant applications were up by 45% compared with the whole of the last financial year. This is a basic problem that we inherited: there is no management of public funds. That is the core problem that the whole of Government faces with our inheritance from the Conservatives, and we will deal with those points.
I turn to the Dartmoor issues, which the right hon. and learned Member for Torridge and Tavistock rightly raised. On 29 October, we appointed Phil Stocker to chair the new Dartmoor Land Use Management Group, which was one of the central recommendations of the Fursdon review. We are moving forward with David Fursdon’s recommendations to create a long-term plan for land use that preserves the cultural heritage of the area, recovers nature and boosts food production. The group will provide a space for stakeholders to discuss important issues and work to strike the right balance between food security and preserving the diversity and abundance of nature in the area. Mr Stocker will be responsible for steering the group to meet its aims and objectives, and one of his first tasks will be to identify and appoint members who bring the necessary knowledge, expertise and engagement to the group. That process is under way, and we expect the first meeting to take place shortly. I absolutely hear the right hon. and learned Gentleman’s invitation, and at an appropriate point I will, I hope, visit and constructively support the work being done.
I also understand that the right hon. and learned Gentleman met officials from Natural England in October for an update on progress implementing the Fursdon review. We have been in discussions since I took up the role, and we wish the whole process well.
I will turn to the agricultural property relief issue—a well-rehearsed debate that will continue in the main Chamber tomorrow. I will repeat the points that I have made before. We are confident that the changes are proportionate and that smaller farms will be protected. Those above the threshold will have 10 years to pay the tax, with zero interest incurred. No one is doubting that it was a difficult decision, but the truth is that the economic situation that the Government inherited has required us to make tough choices. I reassure Members that based on the figures we have, which are the only ones we can go on—actual claims on estates—we reiterate our point: we feel that the vast majority of people will be not be affected.
Robbie Moore
On that point, will the Minister confirm whether, when the Government brought in the £1 million cap, they took into account the size of farming units in any analysis on its impact on future IHT claimants?
Daniel Zeichner
That will be debated further. On our side, the debate will be led by Treasury Ministers who are in a better position to answer those kinds of questions. However, the complexity and the different range of set-ups and structures that family businesses have makes it difficult to make that assessment. The hon. Gentleman will know that when it comes to legislation, there will be a full assessment and we can look into those details then. I stand by the figures that the Treasury has given us. We expect that the changes will affect only around 500 claims for agricultural property relief in 2026-27, so we believe it is a fair and balanced approach.
Caroline Voaden
I would like to ask the Minister whether the Treasury consulted DEFRA on the tax change before deciding to go ahead with it in the Budget.
Daniel Zeichner
The hon. Lady will know that we are one Government and we stand together. Going forward, we are picking up the mess that we inherited, and that is the problem we face. On each of these issues in turn, we have to answer the basic question: who will fix the economic mess? The answer is this Government.
Robbie Moore
Only because I will not have the opportunity to raise this point at the Dispatch Box tomorrow if a Treasury Minister is responding. Will the Minister correct me if I am wrong? When the Government introduced the £1 million cap, they did not look at the size of family farms that will be impacted. Surely they do not understand the value of an estate on death if they have not looked at the size of it, therefore how can they understand correctly the number of claimants who will be impacted?
Daniel Zeichner
We can, because we simply look at the number of claims that have been made in the last few years. That is how we arrive at that conclusion.
Sir Geoffrey Cox
The figures that the Treasury published simply deal with the use of agricultural property relief. What they do not show is how many farms had already used their business property relief before needing to rely on agricultural property relief. They do not take into account the fact that it is not just APR, but BPR, being capped.
Daniel Zeichner
I refer the right hon. and learned Gentleman to the letter that the Chancellor sent to the Chair of the Treasury Committee, which goes into the issue in some detail. It says:
“Currently, of the population of affected estates that claim both APR and BPR, almost a quarter of claims include a claim for”
shares on the alternative investment market. That begins to show the complexity and that the situation is not always as it seems.
I will move on to the double-cab pick-up tax. As I suspect the right hon. and learned Gentleman knows, that was based on a legal judgment by the courts. We respect that judgment, as I am sure he would wish us to. We are also saying, generously, that it will not affect the capital allowances treatment of anyone who already owns a double-cab pick-up. Anyone already leasing a double-cab pick-up from their employer as a benefit in kind will have until April 2029, or their lease expires, before these changes affect them.
I am conscious of the time, so I will just touch on bovine tuberculosis—a hugely important issue that of course has caused huge cost and huge suffering for many farmers. As the right hon. and learned Gentleman acknowledged, the Government have started work on a new bovine TB eradication strategy. The key part of that is pushing much more swiftly on developing a cattle vaccine, which I genuinely think will be the ultimate answer to this very difficult problem, and it very much builds on the evidence and conclusions of Sir Charles Godfray’s 2018 independent review. Alongside that, we will do the first badger population survey in more than a decade, develop a new national wildlife surveillance programme and establish a new badger vaccinator field force. I genuinely think that we can work together on eliminating the scourge of bovine TB.
I conclude by thanking all hon. Members for what has been an informative debate. It is always good to talk about what is happening in Devon. Let me reassure the House that I am absolutely committed, as are the Government, to a strong future for family farms and food producers across the country. I am sure we will be continuing the debate.
