Inheritance Tax Relief: Farms

Monday 10th February 2025 Westminster Hall

16:30

[Sir Edward Leigh (in the Chair)]

Order. Before I call the hon. Member for South Norfolk (Ben Goldsborough) to move the motion, I should inform Members that during today’s debate the parliamentary digital communications team will be conducting secondary filming for its series on procedural explainers.

Forty-nine colleagues have asked to speak in the debate, so if everyone is to get in, I have to impose from the beginning a three-minute limit on everybody taking part after the opener, apart from the winding-up speeches. Every time Members intervene, they will ensure that one of their colleagues will not get in at the end. If the hon. Member for South Norfolk, in his opening speech, takes too many interventions, or his speech goes on too long, he will prevent others from taking part. Let us all bear that in mind—short speeches of no more than three minutes, please.

[Ben Goldsborough (South Norfolk) (Lab)]

I beg to move,

That this House has considered e-petition 700138 relating to Inheritance Tax relief for working farms.

It is a pleasure to serve under your chairship, Sir Edward. To date, the petition in question has received just shy of 150,000 signatures, which is a mark of the strength of feeling that exists about the proposed policy change. The petitioners argue that

“changing inheritance tax relief for agricultural land will devastate farms nationwide, forcing families to sell land and assets just to stay on their property.”

I put on the record my thanks to the diligent staff of the Petitions Committee who have secured for me, as a representative of the petitioners, meetings with the National Farmers Union, the Country Land and Business Association, the Tax Policy Associates, the Institute for Fiscal Studies and the Rural Accountancy Group. As the Member of Parliament for the rural constituency of South Norfolk, which is formed of a patchwork quilt of farms, I am honoured to lead this debate and, in doing so, to give a voice to the farmers in my constituency who have contacted me to share their thoughts about the planned changes to inheritance tax on agricultural businesses.

[Graham Stuart (Beverley and Holderness) (Con)]

In 2012, my right hon. Friend the Member for Goole and Pocklington (David Davis) and I opposed the then Chancellor’s proposal to impose VAT on static caravans, as it was clearly wrong when we looked into it. Will the hon. Gentleman do the right thing, represent his rural constituents and recognise that this ruinous policy will not only destroy family farms across the country but put up food prices and worsen our national energy security? He should do the right thing, challenge his Chancellor and take some of his colleagues with him.

[Ben Goldsborough]

I thank the right hon. Member for his intervention after one minute and 26 seconds. I will try to get through my speech so that he can hear what I am about to say. As I was saying, I want to give a voice to the farmers in my constituency who have contacted me to share their thoughts about the planned changes to inheritance tax on agricultural businesses. It is their views, not mine, that I will focus on today.

Not many petitions submitted to the Petitions Committee can demonstrate not just a willingness to engage in online activism but real-world engagement with Parliament. Campaigns by the NFU, the CLA and the Campaign to Protect Rural England have been effective in drawing attention to petitioners’ concerns, as has the “Stop the family farm tax” campaign, which has placed banners across many constituencies, including mine. No matter what our opinions on the proposed policy changes, this issue has created public engagement with politics from the countryside that has not been seen in over 20 years. That is why this debate is both needed and important to demonstrate to farmers that, by peacefully engaging with Parliament, their voices can be heard. They have been effective in successfully shedding light on the daily challenges that face this fundamental sector. I thank them for that and encourage them to continue to advocate positively for rural Britain.

I want to touch on three key areas that I have discussed with the NFU, the CLA and others: first, the feeling of many farmers about the planned policy changes; secondly, the statistics that underpin the debate; and thirdly, proposals put forward by petitioners, stakeholders and experts that it is important for the Minister to hear and respond to based on the Government’s current thinking. I will aim to cover those topics on behalf of petitioners without being sensationalist. After all, a lot of emotion and politics has been attached to this debate so far, and understandably so. Nonetheless, that has arguably been done at times to obscure the rational arguments that many farmers, MPs and organisations have been making, some of which accept that agricultural property relief is likely to change but advocate for more graduated approaches.

Today is a day for calm, thoughtful debate on behalf of the petitioners, and I welcome all Members’ contributions in that spirit. I suggest that the endgame—a more acceptable policy for farmers—will not be achieved by bashing the Department for Environment, Food and Rural Affairs, the Treasury or the Minister, or by simply repeating the well-worn arguments we have heard over the past few months. Let this debate be a reflection of what this House does best, which is to consider a complex problem from all sides and seek to offer potential solutions to the Government.

[David Davis (Goole and Pocklington) (Con)]

If we take it that the Government are trying to address the large tax avoiders—the Dysons and the billionaires who invest to avoid tax—and that they want to protect real farmers, it is perfectly possible for His Majesty’s Revenue and Customs to do so. Farmers are not on pay-as-you-earn; they all make submissions, every year, on the amount of time, work and effort they put in, and the money they make from farming. Would it not be possible to give an unlimited exemption to people who are real farmers, based on their HMRC submissions?

[Ben Goldsborough]

I thank the right hon. Gentleman for his intervention; I will cover that later in my speech.

Since being elected as the MP for South Norfolk, I have made a conscious choice to sit around as many farmhouse tables as humanly possible. It has been clear to me that South Norfolk needed politics to be done differently and, instead of being on broadcast mode, I have done all I can to listen, engage and try to deliver for all constituents in my little slice of Norfolk. I know that many of my colleagues on the Government Benches have done exactly the same.

Not all conversations have been smooth but, as I said to my recent meeting with the NFU’s Norwich and Loddon branch, I will never shirk away from my responsibility to be their voice in Parliament and to raise their views with Ministers. Today, I have had the opportunity to do that as a member of the Petitions Committee, and I welcome the opportunity to lay out the arguments I have heard over the past few weeks in preparation for this debate.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

Listening is really important. I have heard from my local farmers that they are caught between thinking, “Is this a mistake?” and thinking, “Is this done on purpose?” Did the Government mistakenly not realise that they were going to bring all these family farmers into inheritance tax and agricultural change? Or, worse still, was it planned all along as a way to get the land for housing and some of the net zero targets? Either could be true. Does the hon. Gentleman have a preference over which one it is? Farmers want to know whether it was a mistake that should be rectified or it is an ideal policy driven by the Government.

[Ben Goldsborough]

I am about to share the testimonies of my local farmers in South Norfolk. All too often as politicians we are keen to take the limelight for ourselves instead of listening to those on the ground who want us to put forward their opinions, which is what I am about to do.

One of my local farmers, Will, asked me to share his words:

“The government’s decision to make major changes to APR and BPR”—

business property relief—

“will spell the end for many family farms. Before this announcement, agriculture was already going through a difficult period and for many farmers, this news has left them without hope.”

Another farmer, Robert, wished for me to say:

“We are trapped with no way to mitigate against the effects of this cruel tax. Farming is who we are, it’s in our blood, it’s all we want to do.”

And another farmer, Tim, requested that I share this:

“I have spent my entire working life trying to build this farm up and have added about 200 acres in my time. I see myself as a custodian of the land which I know like the back of my hand and I feel responsible for it…to have to sell would be devastating and would go against all that I have worked for.”

Will, Robert and Tim all fear the significant consequences of the proposed APR changes on smaller family farmers, and I believe that their views are shared by many farmers who have historically operated under a 100% agricultural property relief system. There is no getting away from their genuine concerns and I know that, in his response, my hon. Friend the Minister will address those feelings in the sensitive manner required.

There can be no doubt that the arguments that land values are artificially high due to APR have credence. It is also undeniably true that we see non-farmers buying land for tax-efficiency reasons. Neither of those trends are positive but, to be clear, that does not mean that farmers are wrong when they raise concerns about paying a large one-off inheritance tax bill with anything other than the land they need to keep their heads above water, even if the bill is spread over 10 years.

The proposed policy change has arguably pointed to a fundamental issue for agriculture, which is the annual profitability of British farms. There is significant work for the Government to do to ensure that farms up and down the UK become more profitable during this Parliament, and I know the Minister is working hard on that.

[Catherine Fookes (Monmouthshire) (Lab)]

I thank my hon. Friend for introducing the petition, which some Monmouthshire farmers have signed. Does he agree with the policy of our Labour Government to protect farmers through trade deals, unlike the Conservative party, which unfortunately signed trade deals that flooded our high streets and towns with foreign imports? That protection would really help the profitability of farms.

[Ben Goldsborough]

This debate has created a space in which we can talk about other issues that affect farms. The hon. Member for Epping Forest (Dr Hudson) and I had an amazing debate on biosecurity in the UK, and there was cross-party consensus on many issues. There are also the issues with the sustainable farming initiative, payments through the basic payment schemes and the future of the environmental land management schemes. There is so much we need to do, including through trade deals. I thank my hon. Friend for her intervention.

I have touched on some of our farmers’ concerns, but facts and figures are also important. I apologise in advance, but the next bit of my speech may be a bit dry. The most recent data shows that the top 7% of inheritance tax relief claims accounts for 40% of the total cost of agricultural property relief—that is a value of £219 million. The top 2%—just 37 claims—accounted for 22% of the total cost of the relief and was worth £119 million. This is factual data, and in this context the Government’s ambition for implementing this policy is sound: to end the system by which the very wealthiest in this country can avoid huge sums of inheritance tax by buying up land.

The petitioners argue that the proposed policy changes will not achieve that ambition because not just the wealthiest landowners will be impacted. The CLA estimates that capping agricultural property relief at £1 million could impact 70,000 UK farms. The NFU estimates that 75% of commercial family farms will exceed the £1 million cap, which of course can rise to £3 million under certain conditions. Petitioners and local farmers regularly remind me that not every farmer is married or lives in a farmhouse in their own name.

By contrast, the Treasury projects that around only 500 estates will be affected each year, based on historical claims. The IFS and the CLA both independently acknowledged in discussions with me that it is hard to project revenue or impact because behavioural changes are extremely hard to account for. It is clear, however, that the behavioural changes required by farmers will be enormous.

[Steve Barclay (North East Cambridgeshire) (Con)]

Will the hon. Gentleman give way?

[Ben Goldsborough]

I will continue for a little while.

There is a deep uncertainty among farmers about what the changes will mean for them. Uncertainty is bad for business and it is bad for farmers’ mental health, so I encourage the Government to offer as much proactive engagement and clarity to farmers as possible, including in their response to this debate.

Another primary reason why farmers are so concerned is that they already face a challenge in keeping their businesses profitable. The CLA modelled a typical 350-acre arable farm. They told me that even if they spread the cost over 10 years, the farmer would be paying 100% of their annual profits for each of those 10 years to cover the proposed inheritance tax bill. That is a decade without profit. It should be acknowledged that all individuals across the UK are subject to rules that encourage gifting in advance of death. Farmers look likely to enter this world. It is true that farmers have held on to assets for longer than the average person because of APR, and the habit is unlikely to continue.

[Steve Barclay]

Will the hon. Gentleman give way?

[Ben Goldsborough]

I am sorry but I have taken a lot of interventions and want to move on to the next part of my speech.

I will now touch on solutions. The petition is clear that it seeks the scrapping of the policy. I will leave it for the Minister to respond with the official position; suffice it to say that all Members in this debate can agree that land banking for inheritance tax purposes is wrong, and that land values are prohibitively expensive for many farms to be able to expand and, even more so, for new farmers looking to enter the industry. Many farmers would like to see those things change over the coming years.

Farmers have told me that if the policy is not scrapped altogether, alternatives could be considered to give the sector more stability at the same time as helping the Government to achieve their ambition of a thriving rural economy. One such alternative is a shortened taper rate for older farmers. Under that proposal, a farmer aged 70, for example, would be given two to three years to hand over their property with a 33% or 50% taper rate after one year. Farmers in my constituency would welcome the Minister’s thoughts on that proposal, as it was raised with me at a recent meeting I had with the NFU eastern team. There are, of course, various ways of tweaking such approach by age or taper time but, according to farmers, movement on that front would give those who have worked the longest under the existing APR rules the ability to arrange their affairs more quickly.

[Steve Barclay]

With respect to the hon. Gentleman, I am confused by his argument. He is talking about the crux of the issue: what is the scope of this tax? He voted in favour of it. He was quoted in the Eastern Daily Press as saying that it would not hit “proper farming families”. Is it his position that this tax does not hit proper farming families, or should the scope of the tax be changed? That is the crux of the issue, and with respect to the argument he has set out, I do not know what his position is, other than that he voted not to change the scope.

[Ben Goldsborough]

rose—

[Sir Edward Leigh (in the Chair)]

Order. The hon. Member has spoken for 15 minutes, so could he bring his remarks to a close to allow others to speak?

[Ben Goldsborough]

To reply to the right hon. Gentleman, I said at the start of my speech that the problem is that the issue has been turned into a political football, and that undermines our ability to speak in clear-minded ways about options and opportunities. It is really sad that across from me is a shadow Minister, the hon. Member for Epping Forest, who has worked very hard on this issue, and with whom I have worked cross-party, but the shadow Secretary of State, the right hon. Member for Louth and Horncastle (Victoria Atkins), does not want to work in a manner that could get the best outcome for our farmers.

[David Davis]

On a point of order, Sir Edward. Could you give us guidance? I thought—perhaps wrongly, because of my inexperience—that somebody representing petitioners in the Chamber had to make the argument for them and believe in what they are asking for. We have had absolutely the opposite today; the petitioners have had no service in this debate up until now.

[Sir Edward Leigh (in the Chair)]

That is a matter for debate, but I am sure that plenty of Members present will give the argument for the petitioners, so I would not worry much about it.

[Ben Goldsborough]

There is one other option that it is important to consider before I finish. Mr Neidle, a tax specialist, recently said that the Government should consider a clawback system, potentially raising the threshold and looking at repayment.

My job today has been to represent the views of the 150,000 people who signed the petition and, by pulling together the various options that people would like to see, I believe I have done so. I thank friends from all political parties around the Chamber for engaging and showing interest in this issue. It is important that we all stand up for our communities, and I thank everyone for doing that. I thank the Minister for listening to my contribution and hope he takes it in the spirit of friendship with which it was meant. I hope I have set out the options on the table in respect of which those outside the Chamber would like to hear a response from the Government about what action will be taken.

[Several hon. Members rose—]

[Sir Edward Leigh (in the Chair)]

I remind Members to bob if they wish to speak.

16:47

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

It is a pleasure to serve with you in the Chair, Sir Edward. Today I will highlight the shortsighted, reckless and misguided Labour policy to increase tax on farmers. I start by paying tribute to the petitioner for raising this important issue, and to the hundreds if not thousands of farmers outside this place showing how much they hate the policy.

It is an issue that has dismayed and appalled my constituents in the Scottish Borders. They are bitterly disappointed because this decision by the Prime Minister will mean the sad—even tragic—end of many family farms. Many farmers will no longer be able to pass their property, on which their ancestors may have worked for decades or longer, on to the next generation. That is not right. It is not why they have worked so hard to look after the countryside, and why they have got up early and worked late all their days.

What makes it worse is that they feel betrayed by a Labour Government that promised this would not happen. Labour made it abundantly clear that it would not increase taxes on farmers. But just like with the winter fuel payment to pensioners, and national insurance rises on businesses, Labour did not tell the truth. It broke its promises, and the consequences of it not keeping its word will be profound to people in the Borders, Scotland and the United Kingdom.

It is not only farmers in my constituency that the policy impacts, nor only workers in the rural economy, nor businesses in the food and drink industry. If the policy continues, it will affect everyone in one way or another. Labour’s decision will force the breaking up of many family farms, which will be tragic for those families. But it will also mean higher prices in shops and supermarkets for the rest of us. It will put our food security at risk and harm the environment, as we are forced to rely on costly imports that are not as high quality and that are flown in from much further away. How does any of that make sense?

[Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)]

Does my hon. Friend share my concern that, with the Government showing their inability to crack a good deal when they go into negotiations, they may well give in on any potential trade deal with America and allow cheaper products to undermine our beef and chicken farms?

[John Lamont]

My right hon. Friend makes an important point. If we are no longer self-sufficient in food production, we will become much more dependent on lower quality overseas imports.

Labour has made a grave error, which will cost our farmers and our country dearly. That is why so many people in the borders and across the whole United Kingdom are concerned by this decision. It will have negative consequences that last generations, and that may not be reparable. Unlike any other businesses, farms cannot come back once they close; they are often gone for good.

Labour simply is not listening. The Government even admitted as much to me lately: I submitted a question to the Secretary of State for DEFRA to ask how much correspondence his Department had received from individuals making representations on changes to APR and business property relief for inheritance tax since October, and the only response I got was that Ministers do not know—they do not have this information. That shows a stunning lack of respect for farmers and food producers. The Labour Government simply do not care.

Labour needs to rethink its family farm tax policy. Labour said “change” often enough in the run-up to the general election, and that is exactly what needs to happen now: this deeply damaging policy needs to change. It needs to be scrapped, or family farms will be lost, supermarket prices will go up, food security will be at risk and our environment will suffer. The Scottish and British people have spoken on this policy; now, Labour needs to listen.

16:51

[Sean Woodcock (Banbury) (Lab)]

I will keep my comments brief. Every week when I am out in the constituency, I take the time to visit a farm, and this issue always comes up. It is concerning for many in my constituency. They are clear that it is not as though everything was ticking along nicely and then suddenly this hit; they were sold down the river by the Conservative party, with the trade deals with Australia and New Zealand. But this has caused a great deal of consternation.

A chap I visited last month said, “I don’t want to tell a tale of woe. I am doing okay. There are good farmers and there are bad farmers, and that affects profitability, but I am concerned that this policy is going to rob me of my inheritance, which several generations of my family have worked incredibly hard to build up.” This level of concern, justified or not, merits the Government’s listening. I hope that they will do so.

16:53

[Robin Swann (South Antrim) (UUP)]

The Government have said they are listening. I also hope they hear the tractors and farmers from across this country outside this building today. They are showing their disgust at this proposal.

I want to bring the Northern Ireland angle to this debate. Some 150,000 petitioners signed the petition. I had the pleasure of presenting a similar petition, on behalf of the Ulster Farmers’ Union, signed by 15,000 people from Northern Ireland who oppose the Government’s proposal, which will decimate the Northern Ireland family farm and family farming industry. Because of the structure and size of our family farms, it will hit us disproportionately compared with the rest of the United Kingdom.

This is where the Treasury’s figures do not match up with those of the Northern Ireland Department of Agriculture, Environment and Rural Affairs, or the Northern Ireland Rural Valuers’ Association. We have recently had bare agricultural land sell for £28,000 per acre. I want to emphasise that that is per acre because, when this proposal was first made, some in the Treasury got acres and hectares mixed up. That price of land starts to put the bare minimum small family farm in the scope of this financial grab, which will see the end of what generations of farmers have built up.

Figures from our own Department, DAERA, show that 80% of Northern Ireland’s total farmland, 90% of its dairy industry and 70% of its beef and sheep farming will fall within this scope, so when it comes to the wrecking that this proposed financial tax-grab will do to Northern Ireland farmers, as well as farmers across the United Kingdom, this Government have not fully listened to what has come out of DAERA or DEFRA here. It is, as a Member said earlier, simply a Treasury grab at a balance. It looks at a spreadsheet, but does not have a true understanding of the impact that this will have on families and generations across our country, so I ask the Government and the Minister to engage—and to make sure that the Treasury engages—with the farm unions across this nation, because they do not fully grasp the impact that this will have.

16:55

[Rachel Taylor (North Warwickshire and Bedworth) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Edward. There is no doubt that farmers have suffered hugely over the past 14 years, with the damaging impact of botched Tory trade deals and trade barriers doing a huge amount to undermine their hard work. I know that there is so much that the Government can do and are doing to support farmers.

I welcome the £5 billion pledged over two years to support farming, which is the biggest sustainable food production investment we have ever seen. That will make a huge difference, but I must be honest: some farmers in my constituency have raised concerns with me about the tax changes announced in the Budget, including the 40 or so farmers that I met this morning in my constituency. That is why I felt it was important to speak in this debate: to give them a voice and convey their concerns directly to the Minister.

First, I support Government efforts to tackle the actions of some of the wealthiest people in our society, who are buying up farmland to avoid inheritance tax. Those selfish individuals are not only starving our public services of much needed funds, but are undermining farming by inflating the price of farmland and preventing young farmers from entering the sector. Tackling that fundamental problem is something that many farmers in my constituency support.

I will list some of the concerns raised by farmers in North Warwickshire and Bedworth, starting with Robert, from Overhouse farm in Dordon, who asked whether the inheritance tax threshold could be raised beyond £1 million. Joe and Martin Brandreth, famers from Fillongley and Bedworth in my constituency, asked what steps the Treasury has taken to forecast future farmland valuations of how much this tax will raise, to ensure the policy has been calculated on the basis of valuations of properties at the point of tax, and not on historic values.

Helen Fisher from Grendon expressed her concerns that changes to inheritance tax will reduce the incentive for farms to invest in improving their productivity. Will the Minister confirm what action is being taken to ensure that farmers are incentivised to make their farms more productive? Chris Corbett from Atherstone raised concerns about the impact that erratic weather is having on the productivity of his farm, with a 30% drop in harvests this year. Will the Minister set out what the Government are doing to support farmers to adapt to the challenge of climate change and improve productivity?

Ralph Arnold from Seckington, which is near Tamworth, asked whether the Government could consider rethinking nitrogen fertiliser tax, or exempting double-cab pick-ups from vehicle taxation when they are in use as essential farm vehicles. Finally, Adam Beaty is a tenant farmer who is concerned about the impact on him should his landlord try to sell to cover an inheritance tax liability.

I wanted to make a number of other points, but time is short. Farming is fundamental to the fabric of our nation, and is at the heart of my constituency.

16:59

[Sir Geoffrey Cox (Torridge and Tavistock) (Con)]

This is a flagrant reversal of the promises that were made. The Prime Minister appeared before the National Farmers Union conference and shed crocodile tears as he said to the hundreds of farmers assembled, as well as the widely listening electorate in rural areas, that he knew what it meant to lose a family farm. His voice trembled with that emotional resonance as he conveyed to those people in my constituency, across England and in all the regions of this great country that he would never impose upon them the tax that he has imposed upon them. It is a cynical breach of a promise made by a man seeking the highest office in this land, and upon his promises, thousands of people relied: the elderly widower whose deceased spouse cannot transfer her allowance, the widows, the elderly farmers who now fear that if they do not survive for seven years, their family farm, often the work of a century of their ancestors with herds cultivated and nurtured over decades, will be lost because the family will have to sell off great portions of their farms.

The farms are farmed not necessarily for the profit they make, because the profit is exiguous, but for the love of the life farmers lead and for the support of the fabric of the rural communities that we who represent them cherish and adore. It is that blow, aimed with unerring accuracy at the very heart of rural life, that is the reason for the outrage we do not hear only upon these Benches today. Listen to the horns blowing outside. That is the voice of real democracy. That is the voice of the people crying out to those of us here to change direction on this harmful and damaging decision.

I appeal to the Minister, for whom I feel sorry. He has been sent out like a nightwatchman to face the fast bowling in the twilight of the evening on the test match’s last day, and it is Michael Holding coming in to bowl. I do not envy him his task. He should go back to his seniors and tell them to change direction. The time has come for the Ministry and the Ministers to accept that they are wrong. Their figures are wrong. They should change the policy.

17:01

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

As Chair of the Environment, Food and Rural Affairs Select Committee, I have not been short of opportunities to speak about this issue in recent months, so I shall keep my remarks short so that others might place their constituents’ concerns on the record. I should declare that I am a farmer and landowner. That is entered in the Register of Members’ Financial Interests.

The hon. Member for South Norfolk (Ben Goldsborough), introducing the debate, said that what is necessary now is meaningful engagement with the Government. He is absolutely right. May I say to the Minister who is replying to that debate that that engagement has to come from the Chancellor of the Exchequer herself? For her not yet to have met with representatives of the farming unions from across the four nations of this country is unacceptable, and that has to change soon.

Farmers are not, as the Secretary of State said to the Select Committee on 19 November, wrong in their understanding of this issue. What is wrong are the numbers on which the Government have based the policy that they have brought forward. It will affect many more farmers and estates than is currently believed or admitted by the Treasury. As Jeremy Moody said when he gave evidence to the Committee, this is a policy that penalises those whom the Government want to protect while protecting those whom they say they want to penalise.

The whole policy needs to be paused and reconsidered. It needs to be done because no proper consideration was given in the first instance to the full range of unintended consequences. In that regard, I have one question that I want the Minister to answer today: before the policy announcement was made, what consideration was given in the Treasury to the very particular position of tenants in Scotland who hold their tenancy under the Agricultural Holdings (Scotland) Act 1991? Essentially, the situation there is that a 1991 tenancy gives rise to an asset that is a chargeable asset for taxation purposes, which survives death; but because they are tenants, they do not have an asset that they can sell on in order to pay their tax bill. That seems to me to be a point of fundamental inequity.

If Ministers did not consider that before they put their proposals in the Budget, what else was given insufficient consideration? There is a need to reform inheritance tax. There are good things that, with proper consideration, we could do for agriculture, but in order to do that, the policy must first of all be paused, and the proper engagement that we have spoken of needs to happen.

17:04

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

It is a pleasure to serve under your chairmanship, Sir Edward. As Chair of the Petitions Committee, I am delighted to see such fantastic attendance at this debate.

I have two simple things to say. A week ago yesterday, I attended the farmers’ rally in John O’ Groats, at the other end of the United Kingdom. I was the only politician there. It was a cold, blowy day and the farmers and their tractors were out in force. I spoke to many of them and heard their concern. Even that far away from Westminster, it was exactly the same as we are hearing expressed in this debate: their fear of losing the farm.

That takes me to my second simple point. I was brought up on a dairy farm. Bought by my great-great grandfather, Donald Fraser, it was in the family from the early-to-mid-19th century—a long, long time—but due to financial circumstances, my father had to sell almost all of it. Today, my brother and I own the princely sum of two fields. Here is the point: not a day goes by that I do not look toward the fields we used to own, on the shores of the Dornoch firth, and wish that we still owned them.

The farm is in my blood. It is not like selling stocks and shares, or selling a holiday home in Spain; it is in the blood, it is in the family. Unless I were to win the lottery, I will never be able to buy back those fields. I am not likely to win the lottery and even then, land goes up in value. It is emotional, and that attachment makes it very different from other things one might own. This point has already been made, but once the farm is gone, it is gone forever.

17:07

[David Smith (North Northumberland) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Edward. I have held dozens and dozens of conversations with farmers across my constituency of North Northumberland. It has become clear to me that they welcome the principle of this policy, which is to stop the super-wealthy from minimising their tax liabilities by land banking with agricultural land. Not one of those farmers told me that they have a problem with the aim of the policy: to stop the wealthy avoiding tax. However, in the same conversations, many of the farmers told me that they are concerned that their businesses will be adversely affected. I wonder, therefore, if the relief element of the policy could be recalibrated.

The Government’s aim is to support our farmers and our food security, but we are doing that in a context where Tory inaction over 14 years has left great challenges, including climate change, a muddled and chaotic Brexit, and, as we have heard, deals on lamb and beef that our farmers are concerned about. We are not working in a vacuum. I am the first Labour MP in history for the vast majority of my constituency; that is not because the population were happy with what the Conservatives delivered for the countryside and farmers. I ask the Government to consider whether the balance is right. I have spoken to farmers in my constituency whose farms are worth £5 million, £8 million, £20 million and everything in between.

[Catherine Fookes]

Yesterday I visited Emma, a dairy farmer in my constituency. She still has a mortgage on her farm, which means that she cannot pass it on now. How might the inheritance tax work for her?

[David Smith]

Our farmers are facing a great many challenges, including being very over-leveraged in debt, and we should consider that. I spoke to one farmer whose land is valued at £16 million, so their new inheritance tax liability will be about £2.8 million, but they make just £96,000 profit per year. There are several examples of farmers who have low profits but face enormous bills.

[Julia Buckley (Shrewsbury) (Lab)]

My farmers in my Shrewsbury constituency have told me that they have struggled to make a profit for many years now. Indeed, they say, “The only game in town is to go big or go bust.” In other words, 12,000 small farmers have gone under because, over the last decade, farming has not been a profitable business. They tell me that they are ready to make some of the behavioural changes needed to pass the asset down to the next generation, who have just come out of agricultural college and learned all these new techniques, so that it can be profitable, sustainable and environmentally friendly. However, they also want me to pass on the information that our oldest farmers will not be able to make that behaviour change quickly enough. Will the Minister consider a temporary transitional extension to the taper, perhaps at year two, to help them to make the changes, which they are willing to do, and to make this policy work?

[David Smith]

I agree with my hon. Friend that these are some of the challenges our farmers are facing. As these examples show, the value of the land often bears no relation to the limited cash flow and the profit that is made. It is reassuring that a few tweaks to the policy would remove most of the pressure on family farms while maintaining the pressure on land bankers, who are the focus of the policy. Hardly a single North Northumberland farm will enjoy 100% relief, even with the nil-rate band, so raising the threshold would give instant peace of mind to family farmers.

I suspect that the Government could use data from the Rural Payments Agency and DEFRA to implement an active farmer test and judge whether the land is being put to public use and is therefore eligible for relief. That would differentiate intergenerational farmers and those simply buying farmland to reduce their tax liability. If a clawback mechanism is added and the land is then sold, for example, 10 years after gifting, the Government can reserve the right to claw the relief back for the public purse. Many of these measures have been in place in Ireland since 2015.

I know that the Minister is hearing the same thing that I am from farmers across the country. I urge him and his colleagues to work together to consider whether this policy can be recalibrated to achieve both the Government’s aims of supporting our nation’s family farms and of closing the loopholes that have distorted our land values for too long.

17:11

[Damian Hinds (East Hampshire) (Con)]

The Government talk a lot about growth, and we often debate economic growth both here and in the main Chamber, but when we talk about farming, we talk instead about food production, sufficiency and security. We talk about land stewardship, we talk about fairness, and we talk about rural communities and the countryside way of life. All those things are true and relevant, but this is also a debate about economic growth.

Economic growth requires productivity gains and productivity gains require investment, and this policy is clearly going to hit investment in the vital rural sector badly. That is intuitively obvious, because there is now a new liability that agricultural businesses have to plan for. It also chimes entirely with what I hear in and around Hampshire from agricultural suppliers and machinery dealers about redundancies, depot closures and projects being cancelled. My question to the Minister is: what monitoring are the Government doing of investment in the agricultural sector and the harm that this policy may do to productivity?

It is often said, and it has been said again today, that farming is not a normal business. My East Hampshire farmers are very quick to remind us that it is a business, and they have to be able to make a living, but it is abnormal in one key sense: economists talk about normal profit and supernormal profit, but there is no such thing as sub-normal profit. If a business is not making enough to be economic, the idea is that it is not in business, and many of these farming businesses are not. These are farmers who accept a sub-economic return on capital employed, and they do that because while their farm is a business, it is more than just a business, a job or an investment. Ministers should not expect the same approach to be taken if family farms are broken up and replaced by something else.

The Government have repeatedly said, “Don’t worry. The effect of this will be reduced because couples can pass on assets between them.” However, we know from a written question tabled by my right hon. Friend the Member for North East Cambridgeshire (Steve Barclay), that only half of farmers are in couples. Almost half are individuals, and this policy will affect far more farms than I think, to be fair to them, the Treasury or officials even realised to begin with, and certainly far more than the numbers we have discussed in this House. There are reasons why agricultural relief was first brought in. It was not a loophole or an accident; it was brought in to achieve a purpose, and there are reasons why it has been retained all these years.

It is not unheard of for a Government to discover that when they bring in a tax, its effect in practice is not quite as they expected when they did the spreadsheet and when the Minister signed off the sub. It is not too late for this Minister and this Government to change their minds and to make significant changes. There is no shame in it, and I urge them to do so.

17:14

[Sam Rushworth (Bishop Auckland) (Lab)]

I am here to speak up for the farmers in my constituency of Bishop Auckland, which is a Labour farming community. Farmers in my area are worried. They put their trust in us at the general election, and why did they do so? Because they had been so badly let down for 14 years and they knew that the previous Government could have done more on things like trade deals, supply chains, flood defences and crime.

Let me tell the House what farmers in my constituency are telling me. They say that they have no problem with the principle that we should be closing tax loopholes. To quote the Telegraph, they want to stop billionaires “hoovering up agricultural land”, which they know is pushing up land prices. They even support the principle of paying tax and raising revenue for the Treasury, because they know that Treasury revenue is necessary to improve the NHS and improve schools in their communities, as well as having a strong agricultural budget. They are not asking for a full U-turn, by the way; they are asking for some meaningful tweaks that will help the policy to better target the goals that it intends to achieve.

[Chris Hinchliff (North East Hertfordshire) (Lab)]

We have heard quite a few suggestions already of ways in which this policy could be tweaked or amended. Will my hon. Friend join me in urging the Minister to get Treasury officials to at least model some of those changes, to help to advance the debate in the coming months?

[Sam Rushworth]

I welcome that intervention. There are two areas in particular on which I think farmers in my constituency would like some answers. One is thresholds. Because the policy still keeps the 50% agricultural property relief, it does not actually close a tax loophole at all for the very wealthiest. My constituents would like to see the modelling from the Treasury that says that it would. Meanwhile, because the threshold is quite low, it means that sadly some of the family farms in my constituency will really struggle to pay their inheritance tax bill. They would like to see what modelling has been done around the thresholds; they are not asking for a U-turn, because they understand that it should be neutral for the Treasury, but they would be interested to know whether we could lift the threshold but go to 40% tax at another threshold. Would that better protect the small family farms and do a better job of closing the tax loophole at the same time?

Another point on which my constituents would welcome some consideration is the proposal for a clawback. Someone who inherits a £5 million farm is not a millionaire; they are the custodian of agricultural land, with a responsibility to farm it to produce food for the nation. If they sell a £5 million farm they become a millionaire, but they do not become one simply by inheriting it. Farmers in my constituency would be interested to look at the proposal, and it would be helpful for them to understand the modelling that the Treasury has done. Among that Labour farming community, there is good will for this Government on many things we are trying to achieve. That good will can be retained. There would be no shame in looking at this again.

[Andrew George (St Ives) (LD)]

The hon. Gentleman is making a very thoughtful contribution. He is clearly looking at ways in which the policy can be amended to make it more palatable to the farming community. That may be the reality that we are looking at, rather than getting rid of it altogether. Does he therefore agree that we should look at changing the transitional arrangements so that succession planning can be properly undertaken, which at present it clearly cannot, or indeed that we should look at leaseback arrangements to enable viable farms to continue?

[Sam Rushworth]

There are a variety of things that could be looked at. I met the NFU this morning and we discussed various points. I feel that these are all things that should be considered. I reiterate that I believe that the community I represent still has good will toward this Government and the intentions of this Government, but there are aspects of the policy that could be tweaked to better achieve their intentions.

17:19

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

It is a pleasure to serve under your chairmanship, Sir Edward. I rise to speak for the 468 signatories to this petition who are residents of my constituency. I have to tell you that that is about 11 times more Angus and Perthshire Glens constituents than have signed any other petition from this place. Never in my time in this Parliament have I seen MPs perched on windowsills to be in the room for a debate. There are mass demonstrations outside, and there was a demonstration on the South Inch in Perth at the weekend.

This policy is fundamentally unjust. The Government said that they would not do it, and they have gone ahead and done it. They have applied it without any warning. There is no taper into the new regime. It gives no time for farmers to adjust their tax arrangements. It is diametrically opposed to current tax advice, which is grossly unfair. It ignores the fact that there is no actual financial enrichment; farmers simply become the custodian of an asset. It does not go after the non-farming interests that are avoiding tax. It ignores the disproportionate effect on Scotland. It ignores the fact that a quarter of Scottish farms are tenanted—it has zero provision for those—and it does not take cognisance of the 15,000 Scottish crofts that are grossly adversely affected by it.

This policy is economically incoherent. It is a tax on the production of food. It will precipitate a reduction in investment. That will mean lower yields, which will mean higher prices. That will be inflationary, which is the last thing that this economy needs. It is not just farmers who will be undone by this policy; it is the entire agricultural supply chain.

This policy undermines the reinvestment model from generation to generation. It ignores the societal benefit of agriculture to our rural communities. With BPR, it is a betrayal of the divestment drive to which farmers have so dutifully been applying themselves over the past 20 years. It risks the sell-off of family farms across places such as Angus and Perthshire Glens to faceless international corporations that will not leave anything positive behind—certainly not any profit.

This policy is anti-growth. As I suspect the Government now fully realise behind closed doors, it is a disastrous mis-step. It plays fast and loose with the mental health of farmers. Let me echo the chorus from the National Farmers Union Scotland that this policy must be paused and the industry must be properly consulted. The outcome must be the removal of this iniquitous threat to all that we hold dear in our agricultural and rural communities and economies.

On behalf of the agricultural sector in Angus and Perthshire Glens and across the whole of Scotland—in fact, the whole of the United Kingdom, to which I do not often make reference in a speech—it is not too late to do the right thing. I implore the Minister to do so.

17:22

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

It is a great pleasure to serve under your chairmanship, Sir Edward. Having participated in the previous debate on the subject in the main Chamber, I welcome the different tone from Government Back Benchers. They will get much further with their constituents by reflecting their concerns than by reading out Whips’ points in these debates.

One issue that I want to highlight, because it goes against some suggestions that have been made in relation to so-called land banking, is that when agricultural land is currently sold in my constituency, it is acquired by private equity firms that want to go down the route of industrial tree planting or solar farm production. If we require farms to be sold to meet inheritance tax demands, they will not be sold to new family farmers or new entrants; they will be sold to private equity firms that want not to produce food on our land, but to maximise tax benefits such as carbon offset and other environmental tax benefits. In addition, they do not employ anyone within the constituency—there is no ongoing employment.

Farming does not just produce food and create generational and environmental benefits; it is at the heart of the economy. I have seen that directly: to counter the 2001 foot and mouth outbreak in my constituency, virtually every hoofed animal was destroyed. When farming closed down, the economy closed down. Everybody in the constituency lost out. People were not in the shops, were not buying cars and were not using other businesses. Farming is not just about all the things we have heard about today; it is right at the heart of the economy.

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

Changes to inheritance tax can be made that will prevent people from gaming the system and buying up land to avoid tax. That can be done without an impact on existing farming businesses. Does the right hon. Gentleman agree that for the Government not to have even considered such changes in their previous responses is not only unacceptable, but a dereliction when it comes to food security and national security?

[David Mundell]

What will be unacceptable is if the Minister stands up at the end of this debate and gives the same response that he has given in previous debates, having heard the points that his own colleagues have put forward about how damaging and ill thought through this policy proposal has been. I am looking for a change in tone not just from Government Back Benchers, but from the Minister.

[Esther McVey (Tatton) (Con)]

Does my right hon. Friend agree that the Labour leadership is in serious jeopardy of stubbornly painting itself into a corner, when what is needed is pragmatism and for the Labour leadership to listen to the farmers, the public and its own Back Benchers? For today’s debate to mean anything, for Labour Back Benchers to mean anything and for their words not to be cheap, it is time for the leadership to actually listen and find a way to graciously stop this farm food tax.

[David Mundell]

I absolutely agree. Labour MPs have listened to their constituents—that is being reflected back to us today—and now we need the Minister to listen to Labour MPs.

The other point that I want to get on the record is the point made by the right hon. Member for Orkney and Shetland (Mr Carmichael), the Chairman of the Environment, Food and Rural Affairs Committee, about the specific issue of tenanted farming holdings in Scotland. For tenanted farmers to raise the funds required, they would have to give up their whole holding. They might not even be able to. That has clearly not been thought through as part of this exercise.

What people outside want is a debate that changes policy. They want a debate that shows that the Government are listening, have heard what they have to say and will do something about it. I hope that that will be evident in the Minister’s contribution at the end.

17:28

[Jim Shannon (Strangford) (DUP)]

I should explain that if a Member wants to speak in this debate, they have to be sitting in the hemicycle. That is why I am sitting next to the Minister: because it was the only seat available. [Laughter.] I just wanted to declare that at the very beginning. I am very much opposed to the agricultural farm inheritance tax. The Minister is sitting next to me, so I am going to try to nudge him a wee bit—nudge nudge, elbow elbow, wink wink and all the things we would normally do.

I declare an interest as a member of the Ulster Farmers Union; I understand that there are some people from the Ulster Farmers Union in the Public Gallery today. I am a landowner and a farmer in my constituency of Strangford, and I am here to speak on behalf of my constituents on a subject that will have an effect on every single one of them, whether they realise it or not. Every one of my neighbours’ farms has been passed down from generation to generation. I cannot think of one neighbour who has not had a farm handed down, generation to generation.

[Dr Andrew Murrison in the Chair]

I thank the Ulster Farmers Union, which has worked so hard to provide the information that I will share today. It indicates the depth of the folly of the decision to implement inheritance tax on working farms, and the devastating impact that it will undoubtedly have on food security for the entirety of the UK. For my neighbours, for me and for all the people I know in the Ulster Farmers Union and in Northern Ireland, the land is the farmers’ lifeblood. It is more than land: it is their very reason for existence.

The Northern Ireland Rural Valuers Association, in conjunction with the Central Association of Agricultural Valuers, has used available data to look at the impact of the changes to inheritance tax proposed in October’s Budget. They tell me that 6,000 farming taxpayers in Northern Ireland will be affected by the tax change over a generation. My hon. Friend the Member for South Antrim (Robin Swann) referred to the value of the land. The value of the land in Northern Ireland is more than the value of the land here. I say with great respect to all my English, Scottish and Welsh compatriots—to all my friends in this Chamber—our land is better.

What are the solutions? The Minister is sitting beside me, and I hope he is listening—of course he is. There is a way forward. The Ulster Farmers Union said to me that the value of the land was done in the ’70s, ’80s, ’90s and noughties, which gives an unreal rateable value for today. I suggest that the answer is quite simple: take the threshold from £1 million to £5 million, and all the farmers in Northern Ireland—and in Wales, Scotland and England—will benefit. The threshold is too low, so change the threshold. I say to Ministers and the Chancellor that it is quite simple.

I understand that farmers will be meeting the Chancellor shortly; I look forward to the outcome of that. But I will say one thing: let us change the threshold. Let us give the farmers in Northern Ireland some hope for the future. Let us keep those farms that have been handed down from generation to generation. That is what this debate is all about, or it is for me—I hope the Minister is listening.

17:31

[Ellie Chowns (North Herefordshire) (Green)]

It is a pleasure to serve under your chairship, Dr Murrison. I rise to represent North Herefordshire, where this is an issue of huge concern. Some 914 people in my constituency have signed the petition; I think it is the second highest number of signatories in a constituency. I know that there is a great deal of concern because I hear it from farmers in my surgeries, and I have met dozens of them here in Parliament. I have heard from them loud and clear just how much anxiety and distress this policy is causing, so I want to represent their voices.

I feel that the way the policy has been introduced is deeply regrettable, not only because it has caused such huge distress to the farming community—we are all aware of the mental health challenges that those in the community face anyway, and this has made it worse—but because it hugely undermines the much more positive and constructive conversations that Government and farmers desperately need to have in order to face the challenges of food production, job generation, tackling climate change and protecting biodiversity. Those are areas where farmers and Government need to work hand in hand for the long term, but all of that has been blown up in the air by the way the policy has been introduced—it is super frustrating.

In his introductory speech, the hon. Member for South Norfolk (Ben Goldsborough) spoke about the need to consider complexity and offer solutions, and I agree. I feel that we should be doing that in politics all the time—not just tossing insults at one another across the Chamber, but really working to grapple with this issue. In that spirit, if we are talking about addressing and understanding the complexity, we desperately need a set of figures that we can use as a common basis for discussion. We still have Government saying one thing and farmers saying another. Indeed, the Agriculture and Horticulture Development Board recently said that 76% of farmers will be affected. When will we get some statistics and modelling that we can agree with as a basis for understanding the impact? [Interruption.] Sorry, I will not give way because of the demands on time.

Several solutions have been raised today, such as reviewing the thresholds and the rates. As many have referred to, farmers recognise the problem of the use of land as a tax loophole, but this policy does not plug that gap properly. We should think about the thresholds and their impact on farming. Perhaps we also need to address the issues facing older farmers—those over 75 who have not had any opportunity to engage in tax planning. But fundamentally, we have to fix the problem of farming being insufficiently profit-making to enable people to secure their livelihoods long term. That has got to be the focus of Government policy.

17:34

[Vikki Slade (Mid Dorset and North Poole) (LD)]

It is a pleasure to serve under your chairmanship, Dr Murrison. Last week, I was invited to Goodens farm in Stoborough in my constituency. Phil Randall is a third-generation farmer, and he hosted us with other Purbeck dairy, beef and arable farmers. I saw the investment he has made in his equipment, buildings and livestock. I was really impressed with the innovations he has already put in place to protect him and his business from the steep increases in fertiliser costs after the invasion of Ukraine, as well as the investment he has made in the care of his dairy and beef cows to improve their welfare and his yield. I was so excited to meet his newest calf, which was born by caesarean section and nurtured through its early days by Phil and his children.

I was shocked when Phil told me that his farm is run entirely by him, his wife, his children and two members of staff, which gives me the impression that there is no money left to pay anybody else on the farm. It was really clear that Phil and the other Purbeck farmers, including Ian, Chris, Nicki and Catherine, care deeply about their farms. However, they also care about the wider sector, protecting the countryside, ensuring food security and making sure that they have a sustainable business. One farmer shared with me that the margins on his farm are just 1%. I can think of no other industry in which a business would carry on with a profit margin of 1%.

The farmers are deeply angry about what happened last year, but they have now come to the conclusion that it is unlikely the Chancellor is going to make a U-turn, so they asked me to convey their ideas of what they want from the Government. They want a consultation with them about how these changes can be modified. They recognise that there are people buying up land in the countryside who are not producing food and are not supporting the environmental aims of the Government to mitigate climate change.

The farmers support the introduction of a family farm tax, as proposed by the Liberal Democrats, and the transfer of the inheritance tax liability to the point of sale of assets, not inheritance. They want a temporary relief to create time for estate planning, not just for elderly farmers, but for anyone who dies unexpectedly in the next three to four years, as they noted that farming is an incredibly dangerous profession at any age. They want to see institutional investors forced to be more transparent, having raised concerns about wealth being hidden in their land. They want APR and BPR to be separated and to have separate thresholds.

[Joe Robertson (Isle of Wight East) (Con)]

The hon. Lady spoke about the pessimism that the Government will U-turn on this, but does she share my optimism that they may well U-turn if enough of their Back Benchers make a point?

[Vikki Slade]

That is not really for me to say, but I hope that they are listening. The important thing is that there is time. We have until April next year, and that is why the consultation and listening to all these people is so important.

I saw just how much was being invested in tractors, muck-spreaders, equipment to cut and bale the grass, milking equipment and water storage systems. If we want our farms to be more efficient and more profitable, it is ridiculous to tax farmers on investments in making their farms work better. So I implore the Minister—this tax is going to harm the countryside and food security, and if we end up increasing imports it will also have negative impacts on climate change and animal welfare. It is so important that the Minister hears our message—that of Opposition Members, and the people in the Gallery and in the tractors outside—and I hope that the Minister takes this opportunity to at least reform if not scrap this tax.

17:38

[Ben Maguire (North Cornwall) (LD)]

It is a pleasure to serve under your chairship, Dr Murrison. I stand to speak on behalf of the 800 signatories of this petition from my constituency, and I also speak in this debate as chair of the all-party group on dairy. Almost all of the financial advice that farmers had sought until the Budget had included APR relief in their financial planning and how they would pass on their family farms to the next generation without this ill-thought-through tax. These changes will hit hundreds of family-run farms, many of which have been proudly looked after generation after generation by the same family. I must add that the mental health of my North Cornwall farmers has plummeted since this was introduced.

[Adam Dance (Yeovil) (LD)]

Farmers in my constituency have told me that the Government’s changes to agricultural property relief have damaged their mental health, and some of my constituents have taken their own life. Does my hon. Friend agree that, rather than worsening the mental health crisis in farming, the Government should address it by scrapping this family farm tax, investing properly in rural mental health services and establishing a national working group on suicide prevention, focusing on agricultural and veterinary occupations?

[Ben Maguire]

My hon. Friend will not be surprised to hear that I completely agree and wholeheartedly support those suggestions.

The changes have not even taken effect yet, but their harsh effects are already on show. If no full U-turn is on the horizon, surely we can urge the Minister, with one voice, to look for an alternative to this ill-thought-through tax. The change will not hit the wealthy investors that the Government have taken aim at.

[Mr Carmichael]

I do not think I can listen to many more people say that. When I questioned the Prime Minister at the Liaison Committee before Christmas, he specifically said that what rich people do with their money within the rules was a matter for them, and that the policy did not have a target audience. Does that not point to an inconsistency in messaging among the Treasury and Downing Street?

[Ben Maguire]

As always, my right hon. Friend makes a very good point. I urge the Minister to look for alternatives. We have heard about the Liberal Democrats’ proposal for a working farm test. Other hon. Members have suggested some kind of clawback scheme in cases in which the farm is sold within, say, 10 years of inheriting it.

I will draw my remarks to a close, because I know that other hon. Members want to come in. This family farm tax will raise around £500 million a year—not an insignificant sum—but is it a price worth paying to kill farming in this country and, crucially, risk our food security? The Liberal Democrats have proposed restoring the cut that the Conservative party made to the big bank levy in 2016. That would have raised around £4 billion a year, which certainly puts this family farm tax into perspective.

17:41

[Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to participate in this debate, but I have a sense of déjà vu: a month ago, I stood in my place, the Minister sat in his, and we hoped that the Government would listen. They did not listen. I suppose that we should try to be optimistic. That time, apart from the Minister’s aide, there was not a single Labour MP to be found, but they are all here today. Their approaches have varied. I do not mean to rude to the hon. Member for South Norfolk (Ben Goldsborough), but in nearly 20 years in Parliament, I have never heard a speech that expressed no opinion on the subject in hand. He gets the vanilla award.

The hon. Member for Bishop Auckland (Sam Rushworth) was perhaps tentative and timid, but none the less wanted to hint that it was possible that the perfect selection of policies put forward by Labour might need a little tweak—congratulations on that. However, the award should go to the hon. Member for North Northumberland (David Smith), who was pretty clear that he does not think this policy is right and that it needs to be changed. Praise the Lord that someone on the Government Benches was prepared to come out and say so! That is what they were sent here for—not to do whatever the Prime Minister tells them to.

As I mentioned earlier, when the 2012 Budget proposed the caravan tax, which would have devastated the industry in East Yorkshire—it happens to be based there—and down the coast, because that is where caravans are deployed, we stood against it and opposed it.

[Sam Rushworth]

Will the right hon. Member give way?

[Graham Stuart]

I am delighted to see that the hon. Gentleman is going to stand up and find his inner rebel.

[Sam Rushworth]

There is absolutely nothing timid about what I am telling the right hon. Gentleman: farmers in my community were massively let down by the previous Government.

[Victoria Atkins (Louth and Horncastle) (Con)]

You voted for this policy.

[Sam Rushworth]

I do not know why the right hon. Lady keeps saying that. We have not voted on the policy yet. There was a vote against a motion that was put forward by the Opposition. It was a cynical motion that was designed to make us want to vote against it, because it was so ridiculous.

[Graham Stuart]

I am afraid that the hon. Gentleman shrunk inside his shell, and the farmers in his constituency will have heard that.

It is possible to challenge one’s Government. I said to my Whips then that the best service we could do the Government was to prevent them from doing something stupid, harmful and alienating to voters. I hope that Government Members can see that, because the Opposition cannot change this. People outside say to me, “Can we get this changed?” It is actually up to Labour MPs. They have the majority. Democracy is not about having a majority and doing what one likes. Democracy is about listening and doing what the now Prime Minister told the NFU when he said:

“You deserve a Government that listens, that heeds early warnings”.

There are one or two warnings about. Listen, change: if the Government change, four years on, no one will remember the U-turn. Whatever civil servants say—they are always very keen to stick with a policy—if it is wrong, stop doing it. And this is wrong. In the minute and 20 seconds I have left, let me say why it is so wrong. We have touched on the various elements, but I am not sure we have pulled it all together.

We have a really peculiar group of businesspeople in this country; they are called farmers. They take a return on capital—the millions they have invested in their farms—that is typically less than 1%. There is nobody that I am aware of—no business I was ever involved in—that would remotely consider continuing in an industry that paid less than 1%. These farmers take a pittance and get up at 4 o’clock in the morning for the privilege. They look after the animals and it does not matter if they are ill; they cannot carry their employment rights and go, “I’m not well, I shouldn’t have to go out,” because the cows do not care: they have to go out and look after them, and then they get less than 1% return. Those farmers, the most beneficent public-minded businesspeople in the whole country, then provide excellent food at among the lowest prices in Europe. If ever there were a business that we would not want to go and mess with, it is these—I should not say it, because I will make enemies of them.

[David Smith]

I thank the hon. Member for his scoring system, but can he confirm whether he was part of the last Government, which failed to get £300 million of subsidies to farmers out the door?

[Graham Stuart]

For the hon. Gentleman’s political career, as he has been so brave today, I entirely forgive him that piece of whataboutery.

We must understand how remarkable it is that there is a whole group of businesspeople who take practically nothing from their business, work all the hours God gives, and provide us with some of the finest food in the world at among the lowest prices in Europe. Why would we want to mess with that? Not only do they do that, but they brainwash their children from the earliest age so that they carry on doing it. These people are in indentured service to the nation, providing food while making very little profit. They do it willingly and, in fact, love it: it is their life. To go and mess with them out of some stupid, socialist spite is ridiculous and absurd, and Government Members know that—the hon. Member for North Northumberland certainly does, and he should lead his colleagues to tell the Chancellor to change course, just as we did in 2012 when George Osborne got it wrong.

17:47

[Harriet Cross (Gordon and Buchan) (Con)]

In the 103 days since the Budget and the Chancellor turned farmers’ lives upside down in this country, we have heard stories from farmers across the UK, and will hear more today. Labour Members marched out stories of their own farmers; a few months ago, they did not hear anything from their farmers, but suddenly they have a voice. It is good to hear that they have been listening and now are actually representing those farmers’ voices.

Farmers have been telling us for months about the impact the IHT change will have. I have spoken about the 90-year-old farmer in my constituency whose son is now resigned to the fact that he will have to sell the farm and give up on the livelihood and life he thought he was going to have. I have spoken about the farmer whose wife died earlier last year, who also realised by the end of the year that they were going to lose their farm. However, the Government did not want to listen. They would not to listen to the stories coming from our farmers.

We have heard about the fact that farmers only make 1% profit. As my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) said, what other businessperson would take a 1% profit and want to continue that life? We have also heard about how investment in farms has fallen off a cliff since this policy was introduced. If we do not invest in or encourage investment in farms, how will we increase profitability? Profit and productivity are linked; if we have poor productivity and profitability, we will never get to a stage where any sort of IHT bill—let alone the one proposed by the Government—can be managed by farmers.

It is not just farmers making the Government aware of where they stand; we have heard the NFU and NFUS say that three quarters of commercial farms will be impacted. Experts in valuing the Central Association of Agricultural Valuers says that 75,000 farms will be impacted. The CLA says that an eighth of farms over 350 acres will have to sell land in order to cover the bill. Savills, the property experts, says that 88% of UK farmland will be impacted, yet, as the Treasury says it is only 20% to 25%, that is the figure we stick with. We stick with the Government figure because it fits the narrative; we do not listen to the industry or the experts, which is how we have got into the situation we are now in.

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

When Jane’s husband died just under three years ago, their farm passed to their son—the fifth generation of the family to farm that land. Their accountant says that if that had happened after the Government’s changes, the farm would be looking at an inheritance tax bill of between £80,000 and £100,000. Does my hon. Friend know of any farmer who has that kind of money available without selling off a huge chunk of their farm?

[Harriet Cross]

No, I do not know of any family farmer who has the sort of money to cover that bill. That is the issue. We are penalising the very people who have fed us, who have supported our rural communities and who have been custodians of the land for generations, to fit whatever the Government’s narrative is with this policy.

The unintended consequences also have impacts. There is an impact on hauliers, vets, rural communities, farm shops and workers—they will all be impacted by the policy. It is not just family farmers; they are the start, but the result of the policy spreads through rural communities the length and breadth of the country.

[Caroline Voaden (South Devon) (LD)]

In my constituency we did a survey of all the farmers to see whether the Government’s figures stood up. The Government claim that 73% of family farms will be unaffected by the change in tax relief, but 85% of the farmers who responded to our survey believed they would be affected, with an average inheritance tax bill of £637,000 because of the extortionate cost of land in South Devon. That is nearly £64,000 a year in tax every year for 10 years. Does the hon. Lady agree that this is unworkable, and will see the decimation of our family farms?

[Harriet Cross]

Absolutely. I agree 100% with what the hon. Member says, and it will be repeated across the country in rural Labour constituencies and in our constituencies. It does not matter where they are in the country, our farmers will face hundreds of thousands of pounds in IHT bills because of this Government’s decisions—for no other reason.

Some balance sheets might say one thing and the Treasury’s might say another, but the reality in rural constituencies up and down the country is that the policy will devastate our family farmers and rural communities. The Government must change course before it is too late.

17:52

[Helen Morgan (North Shropshire) (LD)]

It is a pleasure to serve with you in the Chair, Dr Murrison. I thank the hon. Member for South Norfolk (Ben Goldsborough) for opening the debate. It is the first time that North Shropshire has been in the top 10 constituencies in a petition—713 people have signed, which is not surprising when we consider that there are over 1,000 farms in the constituency, covering 62,000 hectares. It is one of the 20 most rural constituencies in the country. Producing food for the country is our main activity, not just through farming and the thousands of people who support those farms. Food production, storage and distribution are all major industries as well.

Farmers have had a tough time: incomes are historically low and farmers can ill-afford to pay inheritance tax when an estate sadly passes on. The Government estimate that 288 farms will be affected in North Shropshire. Even if that is not an underestimate, which we strongly suspect it is, that is a whopping 27% of the farms in my constituency—more than a quarter—that will have to sell off land rather than further invest in the rural economy. That is shocking.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

This policy could force hundreds of family farmers in my constituency to sell their productive land. Does my hon. Friend agree that as well as causing uncertainty to tenant farmers, the policy undermines our ability to address the threat to food security, without discouraging those who land bank for tax purposes?

[Helen Morgan]

I agree with my hon. Friend, and will come on to that point in a moment.

I want to mention Robert, whose family has farmed a traditional mixed dairy and arable farm near Oswestry for 120 years. Their farm is valued at £6 million, which sounds like a lot, but their income is only £60,000 a year. Even if the £3 million dual relief that we have been told about by the Treasury applied, paying it off would wipe out their income for 10 years. In fact, they estimate their liability would be higher than that. It is not just traditional farms that are affected: rental businesses, nurseries, and horticultural businesses all fear that they cannot pass on their business at the time of death as a result of this ill-thought-through policy.

The Chancellor wanted to put wealthy non-farmers off buying land to avoid inheritance tax, but I reckon being charged 20% with 10 years to pay it off is a pretty attractive alternative to paying 40% now. With such a low threshold of £1 million, many small farmers will be left with a liability they simply cannot afford to pay because land does not translate to cash unless they sell it.

This tax does not achieve its mission at all. The idea that farms can survive it is not true. Years of being taken for granted by the Conservatives have left farms in a desperate state. Some 8,000 farms shut their doors last year—one in 25—and farm incomes have been dropping year on year. That is down to a number of factors, including soaring inflation, which is beyond the Government’s control, and the botched implementation of the sustainable farming incentive, which was not. The disastrous trade deals with Australia and New Zealand, and the comprehensive and progressive agreement for trans-Pacific partnership have set an alarming precedent, especially while the President of the United States is holding anyone who does not give him what he wants to ransom with trade tariffs.

The Government must protect the farming budget. We need our family farms to thrive: for economic growth, which is so crucial in rural areas; to produce our food; and to protect our environment. There is still time to reverse this disastrous decision. I urge the Government to listen to the valid concerns and to demonstrate their commitment to rural Britain. Let us axe this family farm tax.

17:56

[John Cooper (Dumfries and Galloway) (Con)]

It is a pleasure to serve under your chairmanship, Dr Murrison.

I represent Dumfries and Galloway, which is the land of milk and slurry. With due deference to the hon. Member for Strangford (Jim Shannon) and his super-valuable land, we have some of the most productive grassland in the whole country. The point that the farmers there make to me all the time—they do not, by the way, have the large estates, but are small and often tenant farmers—is that Treasury Ministers, like accountants, often know the cost of everything and the value of nothing. That is the situation.

There is a fundamental misunderstanding about the reliefs. They are not loopholes; they were specifically put in place to allow multigenerational farming to continue. One of my farmers, Robert, who farms near Moniaive, said:

“APR and BPR are not, as has been suggested, ‘loopholes’ but targeted and necessary reliefs designed to allow multi-generational farming businesses to contribute towards food production and economic growth.”

[Chris Bloore (Redditch) (Lab)]

Labour Members have made several attempts to project possible tweaks to the legislation, with feedback from our members. On that point about loopholes, however, I do not think that anyone is saying that family farms have tried to abuse loopholes; it is the big billion-dollar corporations and land banks that have started to exploit them—[Interruption.]

[John Cooper]

I thank the hon. Gentleman for his intervention, but as he can hear from Opposition Members it has repeatedly been called a loophole. I have been told in the main Chamber that I am scaremongering, which is not right either. That is nonsense—the fear out there is real. Listen to the noise outside. The people outside are not multimillionaires; they are not shroud waving for the sake of it and are not exploiting a loophole. This is a bit like red diesel—again, I suspect, the Minister does not even know what that is. Red diesel is priced cheaply, and that has a direct link with, and effect on, the price of food that we pay in our shops. The whole system is designed, first and foremost, to ensure food security and to deliver quality food at low prices.

We have heard about tweaks and so forth, but it is not for me to suggest tweaks. The Government are in power with a huge majority; they must think again and it is not, as I say, for me to sit down to write out specifics for them. They have the ability not to make a great screeching U-turn, but to make the tweaks that can protect this most important and vital industry. Will the Minister please take away the message he has heard today—including the change of tone from those on the Benches behind him—that this is a real and serious problem? Changes can be made. It is not too late.

17:59

[Wendy Chamberlain (North East Fife) (LD)]

It is a pleasure to serve under your chairmanship, Dr Murrison.

Today, farmers are descending on Whitehall for the third time in as many months. All Members present here, I suspect, know that the Government’s proposals to change APR—and BPR, which we must not forget—have been an exercise in failure: a failure in political judgment and in communication. Based on the latest OBR analysis, they will not even achieve their policy outcomes.

A number of Members have suggested different ways of mitigating this impact, but I point out that there was a report about the half a billion in additional costs to HMRC spent on recouping tax. Funnily enough, that is the same as the £500 million that it is estimated this policy will bring into the Treasury, so perhaps we need fewer loopholes, simpler tax and a way to help working people in this country.

I want to raise an issue mentioned by a number of Members, including the Chair of the Select Committee, my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), about agricultural tenancies and their impact particularly in Scotland. Agricultural tenancies have an inheritable value; there are circumstances in which a tenancy can be passed on via a will, the rules of intestacy or, in some conditions, as a lifetime gift. It is not purely a Scottish occurrence, but it is many times more common in Scotland, because of the Agricultural Holdings (Scotland) Act 1991. Any tenancy to which that law applies can be passed on by the tenant as part of their estate.

The tenancy is valued per acre according to the difference between market rates and the actual rent, because these tenancies have much lower, preferential rates. According to the CAAV— I know it has written to the Chancellor about this, and I am grateful for its explanation—that means the average value of lowland arable land, for example, would be £3,000 to £4,000 per acre. Therefore, a tenancy of 300 acres breaches the APR threshold and starts paying APR—and that is before taking into account the value of machinery.

Although we have heard broad concerns about the future of farms if they are forced to sell land piecemeal, that just is not an option available to tenant farmers. This is complicated and technical, but I think the Government just have not thought about the impact on Scottish tenant farmers. I have raised this four times in the last three months, both at Scotland Office questions and in the urgent question that the Minister replied to a couple of weeks ago, and I got platitudes. I do not think they have looked at this at all.

I am conscious of the perception that farmers are wealthy. We have made it clear today that this debate is about people who have cash held in their land, but cannot release that without selling it. A constituent I spoke to last week is a farmer, previously a tenant farmer; she bought her farm eight years ago with her family, under a mortgage, and is now transitioning from working tax credits to universal credit. We need to deal with that myth, and I urge the Government to pause this policy.

18:01

[Jim Allister (North Antrim) (TUV)]

I have heard no one in this debate defend the land-banking corporations, but I have heard many Members objecting to genuine farmers’ being treated in the same way as if they were the land-banking corporations. That is fundamentally wrong, and therein lies the basic flaw in this proposal.

It is useful to cast our minds back to why, 40 years ago, this concession was introduced. We were told at the time that it was for two reasons—two reasons that still apply today: to enable retention by the next generation, and to allow long-term planning without fear of a crippling death tax. Those two reasons were good then and they are equally good today.

Yet now we have arrived at a situation where the Government tell us—or some of its Members do—that they are bringing this policy in to chase the land-banking corporations, even though the policy, if implemented, will enhance the land banking of those corporations. It is the small, genuine family farms that will not be able to meet the tax and will sell—and who will the buyers be? The buyers will be the land-banking corporations. It is a self-defeating policy if that is its purpose, and it is a policy that will cripple many family farms.

The Government tell us, “Oh, it will affect only 500 farms a year.” The Northern Ireland Rural Valuers Association, a body of professional valuers, has done a massive piece of work on this and has concluded that, in Northern Ireland alone, 200 farms will be affected per annum. If the total is meant to be 500 in the UK and Northern Ireland, which represents only a 40th of this nation, can produce 200 in a year, it is quite clear that the Government are wholly wrong in their statistics and in their evaluation.

Frankly, my local farmers are not particularly interested in Labour chiding the Tories and the Tories chiding Labour about who did what when. They are interested in getting a solution. I say to this Government that strong government is not about driving a policy through because you have a big majority; strong Government is about doing what is right. It is patently right here to have the courage to acknowledge that this is a flawed policy and therefore the Government need to find reverse gear. I trust that they do.

18:04

[Aphra Brandreth (Chester South and Eddisbury) (Con)]

It is a pleasure to serve under your chairmanship, Dr Murrison.

The petition that we debate has been signed by 494 of my constituents. Many of those signatories will be farmers operating on multi-generational farms across Cheshire but, signing alongside those farmers and families, there are many more who are deeply concerned about the changes to agricultural property relief and its wider impact on shop owners, food producers and the wider local economy, which will suffer as a result of this policy. Our community has come together to speak up because people understand how important farming is to our local economy, to our food security and to the sustainability of our countryside. Without farming, the local economy in Chester South and Eddisbury would greatly suffer. I will briefly share some of the knock-on impacts of this ill-thought-through policy.

In Cheshire, we have some of the best beef and dairy stock in the country and have therefore attracted national and multinational suppliers, who have brought millions of pounds into our economy. If hon. Members had a Müller yoghurt for breakfast this morning, it was probably produced in my constituency, in Chester, with Cheshire dairy produce. Or maybe they enjoyed some Cheshire cheese for lunch—again, a product of the Cheshire food industry. I personally recommend Cheshire ice cream—without doubt the best in the country.

Suppliers and manufacturers from across Cheshire provide a significant boost to our local economy. They are employers, innovators and investors, but they cannot do what they do without the supply produced by farmers. Cheshire food produce is vital to some of our best-loved brands but, as in many rural areas, it is often the independent retailers and high street shops that stimulate our economy the most. Without sustainable local produce, shops will lose the unique selling point that sets them apart and our local economy will suffer as a result.

Less than a fortnight ago, I was delighted to welcome to my constituency the Leader of His Majesty’s Opposition, my right hon. Friend the Member for North West Essex (Mrs Badenoch). We started the day at Top O The Town farm in Broomhall, farmed by Richard Davenport, his son Sam and his father John—three generations working together, and one of many local examples of a multi-generational dairy farm, sharing knowledge from one generation to the next, learning, innovating and growing the farm, while employing people locally. Yet the incentives to invest capital on the farm or in measures to improve sustainability and ensure the continuation of farming for the long term are under serious threat as a result of this policy decision.

The economic case is clear, but I will also briefly mention the impact on the mental health of rural and agricultural communities. Farmers face adversity, challenges and stress every single day. There is little that they can control, and this Budget has now taken away their one security: the ability to leave their farm to the next generation. The implications for mental health have already been seen in the most tragic circumstances. We must all stand together and tell the Government that the family farm tax must stop.

18:08

[Steff Aquarone (North Norfolk) (LD)]

I speak today on behalf of the 392 signatories from North Norfolk, and our wider community as a whole. A couple of weeks ago I had the pleasure of spending Saturday morning with farmers outside a supermarket in my constituency; many people who might not have initially been supportive of their cause really appreciated the opportunity to hear directly from farmers.

Historically, North Norfolk has relied heavily on agriculture for employment and economic prosperity. We still have a lot of agricultural employment, but the knock-on is also felt in other sectors. Farmers supply local businesses with high-quality, locally sourced produce. They are custodians of our natural environment and more and more are using their land for sustainable farming and natural flood management, to protect the wider community. Farming is a beating heart ever present at the core of our rural economy, but the changes proposed by the Government run a real risk of ripping that heart out altogether.

While our area is diversifying in a number of innovative and exciting ways, the simple fact is that our farmers will always be there to put food on the table. Keeping farming alive locally allows us to be part of the exciting progress that science and agriculture can make together. The Norwich Research Park, in the neighbouring constituency of the hon. Member for South Norfolk (Ben Goldsborough)—undertakes incredible agri-science and is very near to us, so family farms in Norfolk are the perfect test bed for latest in gene editing of crops, which can bring about higher yields, smaller carbon footprints and less need for pesticides.

This is not a debate about protecting exemptions for multimillionaires and tax dodgers. If the Government had proposals to truly tackle that issue, I would fully support them, and I am sure my local farmers would too. However, this proposal is hugely damaging for family farmers who, year on year and generation on generation, hope to stay in a business that has been made virtually unprofitable by years of Government failure. They are being dragged into a punitive tax by spiralling land costs that are out of their control.

If these were greedy individuals looking to duck tax, they would have left this tough industry many years ago. No one would take on a relentless job that involves hard, lonely labour in all weathers—a job with skyrocketing rates of suicide—just for a tax exemption. People do it because they value the family farm, the people they employ, the supply chains they support and the communities they have served for generations. I urge the Government to listen to farmers, listen to their communities and think again.

18:10

[Charlie Dewhirst (Bridlington and The Wolds) (Con)]

I thank the petitioner and the hundreds of people in my constituency who signed the petition.

As my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) eloquently put it, it is encouraging to see many more MPs present on the Government Benches. I mean that genuinely; previous debates have been a little sparsely attended on those Benches, so I hope this is a sign that things are slowly turning and that there may be change to come.

The hon. Member for South Norfolk (Ben Goldsborough) said that we should not be treating this issue as a political football. That message did not quite reach the hon. Member for Bishop Auckland (Sam Rushworth), but I agree that, although it has become a political football, the problem is that the people outside right now feel that they have not been listened to by this Government. The reason there are again hundreds of tractors and thousands of people outside on Whitehall is that people feel their voices are not being heard. That is why we are in here and they are out there: because nobody has listened to them up to this point.

I want to go back to a point well made by the NFU president in front of the Environment, Food and Rural Affairs Committee in December. He said that the Government should set the sector the exam question and say what they are trying to achieve here. Then the sector can work with Government to reach that agreed point: either to prevent land banking by very wealthy individuals or to raise revenue to support rural public services. Whichever it is, let us get round the table and find a solution that works for all.

However, I fear that those in the Treasury have become like modern-day flat earthers—holding their position in the face of overwhelming evidence to the contrary, whether from agricultural organisations, tax experts, supermarkets or MPs from across the political divide questioning the impact of this tax. We know that the modelling does not take into account the full impact of business property relief. It largely focuses on agricultural property relief claims, but many people, including tenants, family businesses and farming businesses, will only use a BPR claim and not an APR claim. That is why we need to look at this policy again in its entirety.

I ask the Minister once again—dare I say beg him—to please pause this process. Let us get round the table with farming organisations and representatives, and find a better way forwards.

[Dr Andrew Murrison (in the Chair)]

I hope that colleagues who want to speak are on my list. If you are on the list, that is great, but you must still bob; otherwise, I will assume that you no longer wish to speak.

18:14

[Brian Mathew (Melksham and Devizes) (LD)]

Earlier today I had the opportunity to meet a constituent, Darcy Johnson, and I want to share her and her family’s story. Four generations of Darcy’s family have worked Dogwood farm, which is a small, family-run beef and arable farm of about 250 acres. Her grandfather is the current owner. The plan was always to follow the sensible business advice that they and other farmers were given: to wait until her grandfather’s death to pass the farm on to the next generation. Her parents currently manage the farm, and Darcy is studying agricultural business, hoping to take it on herself later.

Generations-worth of planning has followed the suggested advice, but that was suddenly changed overnight with the Budget announcement. Because Darcy’s grandfather is now 92, beyond insurable age, they do not have seven years to wait. If the Government’s plan comes into effect unchanged, Darcy and her family will somehow have to find nearly £500,000 to keep their farm, with barely any notice. If they cannot find the money, because they, like most small farmers, do not have hundreds of thousands of pounds to spare, they will lose their farm—a small, sustainable family business that will likely be replaced by a corporate with no connection to the local community.

The Government need to acknowledge the effect that this sudden rise in inheritance tax will have on small family farms—on people whose families have been working hard for generations to put food on Britain’s tables.

[John Milne (Horsham) (LD)]

It is a fundamental principle that legislation should not be retrospective, but here we have a tax that requires farmers to have acted seven years before they ever knew the tax was going to exist. It is fundamentally wrong and I ask the Government to withdraw the measure.

[Brian Mathew]

I thank my hon. Friend for those comments. These small family-run businesses cannot afford it. If the plan continues, many will be wiped out completely. Such farms are often the backbone of rural communities, doing everything from clearing snow in winter to providing hay bales for village fairs. The loss of the farms will not only devastate the families that own them, but completely change rural life in England— I would argue for the worse. Farmers like Darcy, who is here with us and travelled up for the day to make her voice heard, need to be given a seat at the table so that they can give the Government useful advice on how to dig themselves out of the hole they have unfortunately dug.

18:16

[Caroline Voaden (South Devon) (LD)]

It is a pleasure to speak under your chairmanship, Dr Murrison.

I rise to speak on behalf of the 477 people in South Devon who signed the petition, which is almost exactly the same as the number of farms in my constituency. It is clear from the number of people in this room and the number of people outside what the strength of feeling is about a tax that has caused severe distress across the farming community, yet is expected to raise only around £115 million a year, which is less than 0.01% of Government spending, or less than 0.3% of the tax rises announced in the Budget. Does the Minister think it is really worth all the pain for that amount of gain?

We have talked a lot today about farmers. The rural economy is heavily dependent on farmers but goes much wider than just the farmers themselves. The impact of the change will be enormous in rural communities like mine. The knock-on effect will affect feed, equipment and machinery suppliers, agricultural engineers, the shops that stock high-quality local meat and vegetables, seasonal employment, and all those who benefit from the visitors who camp on farms or stay in farm-based holiday accommodation. I urge the Minister to think about that.

Farmers are key to tackling climate change and the nature crisis and are crucial to our food security, so why do we want to place them under yet more pressure after all the challenges they have already faced in the last decade, including the damaging trade deals, the poorly managed transition to environmental land management schemes, a botched deal with the EU that has limited their ability to export, higher input and energy prices, and of course floods?

This is a toxic mess for farmers, so we carried out a survey of all the farms in my South Devon constituency to find out exactly what the reality is on the ground in the face of this tax change. Of the farmers who responded to our survey, 85% believe they will be affected by the changes, and 90% of the farms are likely to be inherited by the direct descendants of the current owner. The average farm value is £4.15 million, with the highest being £15 million. The price of land in South Hams is among the highest in the country. Farmers did not cause those land prices to skyrocket. The influx of rich second home owners and the honeypot effect has done that, and farmers in my constituency are having to pay for it.

The average bill in South Devon will be £637,000. That is nearly £64,000 in tax every year for 10 years. That tax will not only decimate the family farms of South Devon but have a major knock-on effect on food production. One farmer said:

“The policy as it currently stands will halve food production in a generation.”

I have hundreds of quotes that I cannot read out, but I will cite a family whose farm has been in their family since the Domesday Book. They said they will have to sell at least 25% of the farm assets, which could mean that their children are unable to inherit a farm that goes back to the Domesday Book.

18:19

[Dr Roz Savage (South Cotswolds) (LD)]

It is a pleasure to serve under your chairmanship, Dr Murrison. Dwight Eisenhower said that

“farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field.”

Too often, this Government appear to be a thousand miles away from the cornfield. I urge them to review their changes to the agricultural property relief, listen to farmers and put their needs and the best interests of this country front and centre.

This subject has aroused strong emotions in my South Cotswolds constituency, where we have both ends of the spectrum, from the many small family farms to Dyson’s UK headquarters. Our 750 farm holdings employ more than 2,000 people—including Mike, who is in the Public Gallery today—who all demonstrably contribute to feeding our country and caring for our natural environment. These farmers are distraught. As we seek to reverse the destruction of nature in our severely nature-depleted country, it is clear that we need the participation of the sector that manages 70% of our land.

[Claire Young (Thornbury and Yate) (LD)]

A small farmer with a farm near Frampton Cotterell, in my Thornbury and Yate constituency, highlighted the fact that, as well as high land costs, some of the machinery needed to farm that land costs upwards of £100,000. Does my hon. Friend agree that for farmers to have the confidence to invest in the modern, sustainable farming practices that are needed, we need a policy that recognises the high-capital, low-income nature of farming?

[Dr Savage]

I thank my hon. Friend for a good point well made.

From waking up before the crack of dawn in the lambing and calving seasons, to often finishing the working day beyond midnight during the harvest, it is not hard to recognise the long and draining hours that farmers put in, the huge financial pressures that they work under and the toll that the lifestyle takes on their mental and physical health.

Farmers have to be able to plan for the long term, with their meteorological, financial, logistical and agricultural predictions having impacts for generations to come. Being such forward planners, and having been promised by the current Government when in opposition that there would be no change to APR, it came as a great and not pleasant surprise in Labour’s autumn 2024 Budget to hear that they would indeed be subjected to a change in inheritance tax. I thank my hon. Friend the Member for Horsham (John Milne) for his point earlier about the injustice of retrospective legislation.

[Sam Rushworth]

The hon. Member is making an excellent speech, but some of the farmers in my constituents are concerned that the Liberal Democrats have talked about a land tax and a wealth tax. Will she tell us how that would affect the farmers in her constituency and mine?

[Dr Savage]

I thank the hon. Member for his intervention, but that is not Liberal Democrat policy any more.

The Government claim they are targeting the big wealthy landowners, not family farmers, and they say that once inheritance tax allowances are taken into account, most farms will not be affected, but here is what I do not understand: on the one hand the Government are saying they need to raise money to fill a big black hole, but on the other hand they are saying most farms will not be affected by the change. They cannot have it both ways.

Likewise, the Government say that only 25% of farms will be affected, while the National Farmers Union says that 75% of farmers will be. We seem to have two parallel realities, and never the twain shall meet. Persisting with this policy is bad for our family farms, our food security, nature and future generations. I beg the Government to reconsider and have the good grace to back down on this disastrous miscalculation.

18:24

[James McMurdock (South Basildon and East Thurrock) (Reform)]

Like many here, I prepared a short speech, but I would rather pull out some of its highlights, because this has probably been the most interesting debate I have been involved in, and all the more interesting for being rather one-sided.

Let us go through this issue. First and foremost, the change will achieve the opposite of food security. I could stop there. But if we carry on, we will see farms forced to sell, bought by private equity firms, and half our food production could be lost within a generation. It will be hugely damaging to mental health, and I say with all sadness and sombreness that I believe lives have been lost already.

This policy is damaging and ill thought through. Laws should not be made retrospectively—that is a fine point that has already been raised. Farmers would have had to be aware of this change seven years ago in order to be in a good position for it today, and I want to add to that point. As I understand it, this is also a breach of a promise. If a policy is wrong, stop doing it—that makes pretty good sense to me. It is a self-defeating policy because it will not raise the money that it is supposed to, and it may be rather counter-productive.

That brings me to my rather limited experience of farmers in my constituency of South Basildon and East Thurrock. We do not have a huge amount of farmland, but where we have farmers, they share the exact same concerns as those in the rest of the country. One gentleman shared the story of his finances with me, and this policy will cover essentially every penny that his farm will make over the next decade. Guess what his point was? He was concerned not in the least bit about money for himself but about investing in his business.

We also have in Essex a rather large New Holland plant. If our farmers do not have any money to invest in their businesses then businesses such as New Holland, which produces vehicles worth £200,000 or £300,000, will not have any customers. I am interested to hear what the Minister has to say in response to the debate. As I understand it, he is a reasonable man, and I hope he has reasonable things to say. From my perspective—and I believe from the perspective of Reform—this is a disastrous new policy and I hope the Government change course.

18:26

[Charlotte Cane (Ely and East Cambridgeshire) (LD)]

It is a pleasure to serve under your chairship, Dr Murrison. Labour’s family farm tax will be a disaster for hard-working farmers in Ely and East Cambridgeshire, and throughout the country, and they are farmers who have already suffered under years of Conservative cuts. This new tax policy threatens to devastate farms nationwide, potentially forcing families to sell the land that they have farmed for generations.

As we have heard, farming is not just a job but a way of life: it is a legacy passed down through generations. By imposing this tax change, we risk breaking that cycle and undermining the very foundation of our agriculture industry. I have met farmers across Ely and East Cambridgeshire and they feel angry and dismayed. More than that, they are hurt because they feel their voices are not being heard and their concerns are being ignored.

The impact of this tax was brought home to me when I visited a family farm in my constituency and sat around the kitchen table with three generations. The third generation had handed the farm to the fourth generation, who were now unsure whether they could hand it on to the fifth generation without inheritance tax and a tax bill that could not be paid from the farm’s income. They showed me around the developments that various generations had made to the farm, including hedgerows, ponds and a horse-riding facility for the local community. Many of those could be lost to raise funds to pay the inheritance tax, or lost if the land was sold on.

Remember, these people feed us and care for vast areas of our green and pleasant land, yet we allow wholesale food prices to be kept low, make them compete with foreign food imports that are produced to lower standards, and reduce agricultural support grants. We stand by while climate change delays their planting, reduces their harvests and increases pests and disease. Making farmers pay inheritance tax could be the final straw for British farms. The Government need to restore the inheritance tax exemptions to save our family farms.

18:28

[Gideon Amos (Taunton and Wellington) (LD)]

It is a pleasure to serve with you in the Chair, Dr Murrison.

I rise to speak up for the 337 signatories to this petition from my Taunton and Wellington constituency. One thing that we should have learned—surely, I hope, the Treasury must have done—is that farms are asset-rich but cash-poor, and that especially applies to smaller family farms. The Treasury’s figure that only 27% of farms will be affected is therefore an underestimate. As the NFU has pointed out, it is more like 75%, because Government figures often leave out the fact that changes are being made to both business property relief and agricultural property relief. That means that more farms will experience an impact, since the maximum allowance applies to both combined.

More importantly, this measure fundamentally misunderstands that the value of a farm is wrapped up in the land and is about not just pounds and pence, but the integrity of that farm. If one starts selling off chunks of that farm piecemeal, time after time, one eliminates the value of that farm as a whole. The Government need to accept the damage that this family farm tax could do.

The Minister might say, “The money can be borrowed—why do they not just borrow the money and pay it off over time?” Ed Hawkins from Cutsey farm in Trull came to see me and explained that if he annualised that payment over a number of years, it would wipe out the very small margin that he depends on to live. We have heard the same thing from other Members. It is not realistic. Robbie Vile from Higher Lillesdon farm in North Curry came to see me with his son, Charlie, who is hoping to go into farming. However, looking at how farming has been treated recently—the delays in the SFI payments, the underspend of a full £358 million of the agricultural budget over the last three years, massive advantage given to Australia and New Zealand, cheap imports after Brexit and now inheritance tax—they ask: why would any young person be encouraged to go into farming in those circumstances?

[Graham Stuart]

Does the hon. Gentleman agree that it would be useful for the Minister to say from the Treasury Front Bench what the average profitability is in British farming? It would be useful to have that on the record, because it is in that context that we have to look at this. If we do not see it in context, we just compare farming with other businesses and can easily mislead ourselves as to the reality for farmers across the country.

[Gideon Amos]

I agree; that would be a very useful statistic. If the Minister is not willing to look it up, I hope he might ask the House of Commons Library to do so, because it would certainly reveal the vast number of farms that would be affected by the scale of the tax that is proposed for them.

In short, I have no objection to the taxing of super-large landowners who use farms as a loophole to avoid inheritance tax—in fact, I would support it. But the irony of this policy is that it will drive more land into the hands of those super-large landowners, because every time farmers have to sell off some of their land, it will go to one of those bigger companies. Seeing that land being sold piecemeal time after time will only damage British farming as a whole. Drawing this tax down to some of the smallest family farms in Taunton and Wellington, and across the country, is unjust. It will not raise the money that the Government say it will. It will mean piecemeal disposal of farms up and down the country. The Government really must raise the threshold for this policy or extend the transitional relief. If they do not do that, the policy needs to go and it needs to go now. That is what the Liberal Democrats would do.

[Dr Andrew Murrison (in the Chair)]

Colleagues, we have some time available, so I am prepared to give a bit of latitude for the Front Bench speeches. I would suggest an indicative 15 minutes, starting with the Liberal Democrat spokesperson, Sarah Dyke.

18:33

[Sarah Dyke (Glastonbury and Somerton) (LD)]

It is a pleasure to serve under your chairmanship, Dr Murrison, and to speak on behalf of the Liberal Democrats on this incredibly important issue. I thank all right hon. and hon. Members for their contributions, which highlight clearly the strength of feeling from around the country. I also thank the people who signed the petition, especially the 520 from Glastonbury and Somerton.

As has been well rehearsed, British agriculture is staring over a cliff edge. It has suffered from an almost never-ending list of difficulties over recent years: Brexit, energy prices, the war in Ukraine, the terrible Tory trade deals and a botched transition from BPS to ELMs. Against that background, the Government’s decision to implement changes to APR and BPR has rightly drawn criticism and anger from across the sector. The Liberal Democrats are deeply concerned about the impact that the family farming tax will have on farmers and rural communities right across the country.

I am in constant dialogue with farmers from across Glastonbury and Somerton. A consistent message from many is that this decision will inevitably lead to many family farms closing their gates for the very last time over the next few years. Just this weekend, I met a farmer’s son, who is in his 40s, on his family farm in Low Ham. He explained that he hoped to move away from his career as a civil engineer and go back to the farm full time, keeping the beef suckler herd at the heart of the business but introducing diversification projects to maintain a baseload of income for when agricultural markets fluctuate. He told me that the changes to IHT

“will be the end of any chances we have of keeping our farm going. I feel totally demoralised.”

[Wendy Chamberlain]

My hon. Friend is outlining the impact of this policy. The example that she gave about her constituent reminds us that there is a multigenerational element to farming, and families often live together. The Government have said that farmers should consider tax planning, but one challenge with tax planning is that a donor cannot keep any benefit from a gift. Do we think the Government intend to suggest that older parent farmers who tax plan need to move off the farm?

[Sarah Dyke]

I thank my hon. Friend for a very well made point, and farming is indeed often multigenerational. This is putting huge stress on farming families. I myself am from a farming family. My mother is 81, and my father died about a year ago. The pressure that it is putting on her to think about whether she can survive another seven years is so distressing, and I know that she is not alone.

[Dave Doogan]

For very good reason, we do not apply tax to food. Does the hon. Lady agree that for the same good reason, we should presumably not apply tax to the production of food? Does it not amount to the same thing?

[Sarah Dyke]

I agree with the hon. Gentleman.

Levels of confidence among the farming community are at a worryingly low ebb. The National Audit Office reports that only one in three farmers are confident that DEFRA and its agencies can deliver their proposed changes to schemes and regulations. The family farm tax will only increase pressure on farmers, while burdening with extra uncertainty and anxiety farmers who are already suffering with their mental health. Today marks the beginning of Mind Your Head week. Now in its eighth year, it is a campaign that amplifies mental health awareness, run by the Farm Safety Foundation and Yellow Wellies. This year’s themes are love, positivity and resilience—three characteristics we should show to our farmers.

Recently, the Office for Budget Responsibility assigned any revenue from this tax a high uncertainty rating, stating that any

“yield from this measure is not likely to reach a steady state for at least 20 years.”

The Treasury projects that the combined changes to agricultural property relief and business property relief will raise approximately £520 million annually. Using HMRC figures on the total cost of each relief, however, the Liberal Democrats have calculated that the proportion attributed to the APR changes will be only around £115 million, confirming that this misguided tax will penalise British farmers for essentially no benefit.

In its report, the OBR reiterates that the measure will hit older farmers hardest, because they will find it difficult to quickly put in place the transitional arrangements to restructure their affairs in response to the pending changes. I recently spoke to a farmer from Martock who told me that their parents, who are in their late 80s, are horrified by this tax raid. They do not want to lose their home and their business, but the lack of time to implement the changes may make that their sad reality. They implore the Government to consult on transitional arrangements that work with them and for them.

I fear that these family farms will instead be broken up and parcels of land will be sold off at a deflated land value to already wealthy landowners, who will simply add to their large land portfolios.

[Jim Shannon]

I commend the hon. Lady on her excellent speech. I echo what she says about the stress experienced by the elderly generation—the mums and dads. They are probably getting ready for the future and settling themselves into handing the land over to their families, but the situation is causing stress, anxiety and depression. She has been at the forefront in addressing mental health in the countryside. It is not only the young farmers who will feel the pressures of this change; it will also be the mums and the dads, the aunts and the uncles, the grannies and the grandads.

[Sarah Dyke]

I thank the hon. Gentleman for making that point. Indeed, a recent survey shows that 95% of young farmers under 40 see mental health as their biggest concern. It is so significant.

I agree with farmers in Glastonbury and Somerton who feel that the thresholds have been set far too low. Some of them have told me that the figures that the Government have arrived at are just plain insulting. Many farms have a land value that is way in excess of any returns that can be earned on their land. As we have heard, farmers are capital-rich but asset-poor.

A dairy farm near Broughton has been a family farm for five generations and more than 100 years. The farmers there have told me that they already struggle to make a living as it is, without having to face the prospect of thousands of pounds each year being eked away from their business when they pass away. Their son wants to come into the farming business, but the proposed changes will destroy his chances of success. The changes will destroy everything that that family has worked so hard for throughout their lives, trying to secure the business for the next generation.

What is so galling is that the family farm tax fails to address the key issue of land being snapped up by wealthy individuals as a tax haven. Like others, I am desperately concerned about the actual number of farmers who will be impacted by the IHT changes. The Government resolutely refer to a figure of only 500. In my view, however, one farm is one farm too many. My point is: where has this figure of 500 come from? The Government claim that it is from the OBR, but the OBR says that is not the case. If it is not, perhaps the Minister can confirm today where this figure has originated from, and how.

[Helen Morgan]

My hon. Friend is doing an excellent job of summing up the debate. Lots of residential houses in rural areas such as mine have a couple of acres at the back, which people might use for hobby farming. They are not commercially viable farms. Does she agree that if the Treasury have taken those into account, it will have grossly underestimated the impact of this change?

[Sarah Dyke]

My hon. Friend is absolutely right. Many in the industry feel that that figure is a vast underestimate, with inflation likely to bring yet more farms over the threshold within the next generation.

I hope that the Government will look again at their modelling to see how they can protect family farms and target those who use agricultural land to avoid paying tax. The Liberal Democrats urge the Government to reconsider and raise revenue for public services more fairly by reversing the Conservatives’ tax cuts for big banks, increasing the remote gaming duty on online gambling profits and raising the digital service tax on social media companies and tech giants. We urge the Government to support British farming by investing £1 billion annually in profitable, sustainable and nature-friendly farming; reducing trade barriers with Europe, including with a comprehensive veterinary agreement; and strengthening the Groceries Code Adjudicator to protect consumers and farmers from unfair price rises while supporting our producers.

The food security of the nation is imperative to national security, but I fear that these latest measures may have a negative impact on it. It is deeply disappointing that after years of the Conservatives taking rural communities for granted, we now see more of the same from this Government. I urge the Minister to rethink his attitude to farming and rural communities. My colleagues and I on the Liberal Democrat Benches will be fighting tooth and nail to make sure that no family farm receives a hammer blow to their business from these changes. I echo my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) in urging the Minister to please pause and reconsider.

18:45

[Robbie Moore (Keighley and Ilkley) (Con)]

It is a pleasure to serve under your chairmanship, Dr Murrison. Here we are again! As we speak, thousands of farmers are once again rallying outside the gates of this building. Over the past six months, our farmers have repeatedly been told by this Labour Government that their way of life is expendable and that their hard work, their sacrifice and their future can simply be priced up and taken away. Is it any wonder that our farmers have shown up in such vast numbers again today?

Make no mistake: it is not just our farmers who are outside our gates. Across the country, more than 148,000 people have signed the petition because they know, just as Opposition Members do, that the family farm tax is wrong, is vindictive and must be scrapped now. I thank the hon. Member for South Norfolk (Ben Goldsborough) for leading this petitions debate, but I have to say that he did a disservice to the petitioners, who put their faith in him to lead this debate, by not actually forming an opinion. He communicated strong arguments, but he did not form an opinion. He was a mere spokesman and did not use his opportunity in this debate to voice properly their concerns.

What an image for our farming community to take away from this debate! Where on earth is the Secretary of State for Environment, Food and Rural Affairs? The shadow Secretary of State, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), is sitting beside me. Where on earth is the farming Minister? He is absent. What message does it send that the Labour party has filled up its Benches but that only five Labour Members spoke, despite having the opportunity to voice their concerns in this three-hour petitions debate, and that all five of them voted against scrapping the family farm tax when we brought the motion to the House? This is probably one of the most important debates we could have on this issue, and yet once again those with responsibility for rural areas and our farmers are missing in action. There are Labour Members who have turned up but have not even contributed to the debate, despite representing large rural constituencies.

Where is this Government, who claim to be on the side of rural Britain? If they had actually visited some of their farming communities, they would know just how damaging to our farming community their choice to implement the family farm tax is. They might have had some of the devastating conversations that I and many Conservative Members, including the shadow Secretary of State, have had. I would like to share some of them.

Just last week, in Northamptonshire, I met George, who has worked on his farm all his life and is nearly in his 80s. Unfortunately, he is extremely ill. He knows from his diagnosis that he does not have long to live, but he is not sure whether he will live beyond 26 April. He knows that if he should pass away before 26 April, his IHT bill will be zero, but if he passes away after 26 April, the tax bill for his family will be well over £1 million—a debt that his family simply cannot sustain. Taking his own life was an option that was put forward to me. These are horrific choices and unthinkable amounts of pressure for any individual or family to be put under, never mind some of the most vulnerable people in our society.

[Graham Stuart]

My hon. Friend is giving a very powerful speech. It is true that George was given no notice and no ability to plan for this important impact on his life and on everything he has worked for—but is it not worse than that, because he explicitly relied on a promise not to do this? That makes it particularly unforgivable.

[Robbie Moore]

I could not agree more.

[Julia Buckley]

Will the hon. Member give way?

[Robbie Moore]

I will answer this point before giving way. I could not agree more with my right hon. Friend the Member for Beverley and Holderness (Graham Stuart): the electorate were sold false promises in the run-up to the general election. They were specifically told that this Labour Government would not change agricultural property relief, but that is exactly what the Government have done.

How will the Minister communicate with George? What will he tell George, based on the promises that were given in the run-up to the general election? I cannot believe how many times I have asked this, but will the Government commit to recording suicide statistics across the farming sector as we move closer to April 2026? If the Minister is so determined to carry on with his family farming death tax, will he at least look at changing the abruptness of the tax’s implementation, in order to protect the most vulnerable in our farming community? It cannot be right that this Government are forcing people to make those decisions.

Another point that has been made is that the tax also hits our next generation, the very young people we need to power our industry forward. What does the Minister say to Gemma, the granddaughter of a lifelong farmer who has been forced to split up the family’s farm, leaving their future in doubt? What does the Minister say to the thousands of young farmers up and down the country, many of whom are outside this building right now, who are in a similar situation because of this Government’s choices? I spoke to a few of them outside, before coming into this House. The same concerns have been raised by my hon. Friend the Member for Dumfries and Galloway (John Cooper) and my right hon. Friend the Member for East Hampshire (Damian Hinds).

Then there are the tenant farmers. About a third of agricultural land is farmed by tenants. I spoke recently to Tom, a tenant farmer who stands to lose not only his livelihood but his family home, as his landlords scramble to reduce their IHT liability before April 2026. The Tenant Farmers Association is already warning of the mass renegotiation of many agricultural tenancies ahead of the family farm tax kicking in. For the tenant farmers there is no protection, because the Government did not see fit to recognise their unique situation. Will the Minister recognise the injustice to which tenants like Tom are being exposed through this Government’s choices? Will he provide protections for those with tenancies and for the whole agricultural sector?

Many points have been made by Opposition Members, including by my hon. Friend the Member for Chester South and Eddisbury (Aphra Brandreth), who talked about the wider implications on our food sector. Just last week, I was at the Yorkshire agricultural machinery show, where I met a tractor dealer who is also in a family business and struggling to stay afloat. Why? Because confidence is draining from the farming sector, and orders for new tractors, machinery and equipment have reduced significantly.

[Carla Lockhart (Upper Bann) (DUP)]

I commend the hon. Member for his sterling work. He will know that early mornings, late nights, no holidays and low profit margins make up a typical day in the life of British farmers. They do it because they love the land, and they do it to feed our nation and sustain our rural communities. Does the hon. Member agree that this tax grab is a wrecking ball that will decimate our family farms? If Labour proceeds with it, it will have the death of rural Britain and rural Ulster on its hands. We need to stand up, stop this tax grab and ensure that the farmers outside this building today are heard in this place.

[Robbie Moore]

I could not agree more. It is telling that we have had strong representation in this debate not only from Northern Ireland, but from Scotland and every part of this United Kingdom. All Members have voiced their concerns that Labour’s choice to bring in the family farm tax will have catastrophic consequences not only for the hard-working families who are outside the gates of the Houses of Parliament right now, but for the wider agricultural sector.

Similar comments were made to me at the Yorkshire agricultural machinery show, which I attended earlier this week. Machinery dealers told me that they are being impacted not only by the lack of confidence resulting from Labour’s choices to reduce inheritance tax relief, but by the consequences of employer national insurance and other pressures being put on the wider sector. As if that were not bad enough, the business owner I spoke to will, by their own calculation, face a nearly £800,000 tax liability on death as a result of the changes to business property relief. That business has been trading for over 130 years and now faces the end of the line.

The impact is not just on farming family businesses, but on the wider agricultural sector. As my hon. Friend the Member for Gordon and Buchan (Harriet Cross) said, the NFU has undertaken research that suggests that unfortunately 75% of farming businesses will be affected. Research released recently by Savills suggests that 88% of farmland will be affected. Research conducted by the Central Association of Agricultural Valuers suggests that the Government underestimate fivefold the tax impact. These are professionals in the industry, and the Government are not even willing to listen to their points.

[John Lamont]

My hon. Friend is speaking powerfully about the issues that will affect the farming community. He mentioned the NFU; I met NFU representatives in Scotland recently and was appalled that the Treasury had refused to meet them. The representative body of farmers in Scotland is reaching out repeatedly to Treasury officials for a meeting to discuss its concerns, but Treasury Ministers and their teams are refusing to engage. They are just not listening. Does my hon. Friend agree that the Treasury is just not taking its responsibilities as seriously as it should to understand the impact?

[Robbie Moore]

My hon. Friend makes the point powerfully: collectively, all industry bodies and professionals in the sector are united. The NFU, the CLA, the CAAV—of which I put it on record that I am a fellow, having previously practised as a rural practice surveyor, so I understand the implications on the value of farmland—and Savills, as a key land agent, are all saying exactly the same thing: that this Government’s policy will have catastrophic consequences. My understanding is that the Chancellor has not yet even bothered to reach out to any of those professional organisations to sit round a table and try to understand their concerns. That point was made very eloquently by my hon. Friend the Member for Bridlington and The Wolds (Charlie Dewhirst).

[Dave Doogan]

The shadow Minister is articulating the substance of the issue with great passion. Does he agree that at the heart of this fiscal misadventure is classic Treasury dogma, whereby the principal objective is to quantify the price of something and take no cognisance of its value? APR and BPR will unravel for this Government. Does he agree that it would be far better for them to take steps to row back on this policy now, rather than waiting for it to go absolutely pear-shaped?

[Robbie Moore]

The hon. Member makes a very powerful point: this is about the choices that the Labour Government are imposing on many of our family farming businesses. Those families are now having to make difficult decisions about whether to look at disposing of land, plant and machinery or livestock to fit an IHT liability that may come down the line. All of that is reducing their productivity, which will have an impact not only on those family farming businesses, but on UK food production and UK food security. That is why I join all Opposition Members in calling on the Government to change course immediately.

Farmers are not multimillionaires. Many struggle to break even. As my right hon. Friends the Members for Beverley and Holderness and for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) have said, the vast majority of returns for our farming businesses are less than 1%, yet in most cases the value of the land on which they sit will be severely affected by the IHT changes, because the threshold that the Government are bringing out is £1 million. When the average size of a farm in England is 200 acres, and we take into account the farmland, the cottage that might exist on the farm, the plant and machinery, the livestock and the growing crops or stocks that may be in store, the value will be significantly higher than £1 million. That is why the Government need to listen to the NFU and its statistics.

[Jim Shannon]

I commend the shadow Minister. He is speaking exceptionally well and encapsulating the opinion of almost everyone in this Chamber. I thank him for that. In my contribution, I referred to the threshold. Instead of being £1 million on a rateable value in the ’70s, ’80s, ’90s and the whole way through, it should be at today’s value. Does he therefore agree that the threshold should be not £1 million, but at least £5 million?

[Robbie Moore]

I say to the hon. Member that the Conservatives have been absolutely clear: we would axe the family farm tax, and we would reverse the changes to business property relief and agricultural property relief, which have such huge and catastrophic implications. In my view, the Government need to go further—not tinker with thresholds, but provide proper, decent certainty to the whole agricultural community by reversing this provision, which will have catastrophic implications that they admit themselves will give the Treasury revenue of only about £500 million. In my understanding, that would keep the NHS going for about 20 hours. Given the detrimental impact that the changes will have, the Government should think about reversing this disastrous policy.

For the 10th time of asking in this place, what impact assessment has the Treasury made of the effect on growth within our entire agricultural sector as a result of the autumn Budget? What about all the other negative implications—employers’ national insurance, the minimum wage increase, the de-linked payments significantly reducing, and capital grants disappearing—even before we start talking about the family farm tax?

When this tax was first announced at the Budget, I thought that maybe our new Labour Government were being naive. Perhaps they did not understand the catastrophic impact their Budget would have on our farming businesses, and would soon change course. After six months, however, the Government have consistently refused to listen to the NFU, the CLA, the Tenant Farmers Association, the CAAV, Opposition Members and others who have repeatedly tried to expose the damaging impact of the tax.

[John Lamont]

My hon. Friend is being very generous with his time. One group he has not yet mentioned is the supermarkets: Tesco, Asda, Marks & Spencer, Lidl, Aldi, the Co-op, Sainsbury’s and Morrisons have all urged the Labour Government to pause and consult, because the UK’s future food security is at risk as a result of this policy.

[Robbie Moore]

That is absolutely the point. Others outside the sector, including all our supermarkets, have come together in agreement to say how catastrophic the damage caused to the farming sector by this Labour Government will be. Indeed, the 250,000 who signed the petition launched by the shadow Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for Louth and Horncastle, which was presented to the Treasury a month ago, all agree with the comments that Opposition Members are making.

The Labour Government have wilfully ignored the farming community, the machinery dealers, the feed merchants, the auction marts, the supermarkets, the wider agricultural sector, including accountants, bank managers and land agents, and indeed the wider public. All have voiced their concerns that the family farm tax will have a crippling impact on UK agriculture. On top of that, as I said, the Chancellor continues not to meet any stakeholders. Today, as we have seen, no DEFRA Minister has even had the decency to turn up to this debate, despite its being of incredible importance.

No, the Government were not being naive. The reality is much worse. What is now clear is that this Government’s family farm tax is purposely vindictive. Indeed, I now believe that it was designed to be this way. The Government’s actual intent is to send a strong message to our farmers that they are not needed, that they do not matter and that they do not play a vital part in our national agenda.

As someone who has been involved in agriculture all my life since entering this place, this is personal to me. That is why we on the Conservative Benches do value our farmers. That is why the Conservatives will axe the family farm tax and reverse the changes to agricultural property relief and business property relief—no ifs, no buts.

As I have said, I can only hope that the Minister is about to get to his feet to confirm, right now, today—with all of our farming community watching this debate and many others on the streets of Westminster after travelling from far afield to get here—that his Government will listen, make changes and, hopefully, axe their vindictive family farm tax. If he does not, I can tell him that Opposition Members will keep coming back, again and again, until he and his Government finally stand up for our farmers up and down this country.

19:05

[The Exchequer Secretary to the Treasury (James Murray)]

It is a pleasure to speak in this debate with you in the Chair, Dr Murrison. I begin by extending my thanks, as other Members have, to my hon. Friend the Member for South Norfolk (Ben Goldsborough) for opening today’s debate. I recognise his commitment to making sure that his constituents’ opinions are heard here today. I also thank all other hon. Members who have contributed to today’s debate for setting out their views.

I appreciate that some Members disagree with either the principle or the detail of the changes that the Government have announced to agricultural and business property reliefs. It is important to be able to debate this issue here today, given the public interest in this topic. I am aware of the strength of feeling, both within the room today and outside, including from the almost 150,000 people who have signed this petition. I understand, as the petition sets out, that there are concerns about the impacts of the reforms to the reliefs, particularly on working farms.

I will seek to address the points that hon. Members have raised in a moment, but, first, I would like to emphasise the fact that the decision to reform agricultural and business property reliefs was not taken lightly. It was one of many tough decisions that we had to take at the autumn Budget in 2024, given the incredibly challenging fiscal position we inherited from the previous Administration.

[Rachel Taylor]

Does my hon. Friend agree that, until we improve the living standards of ordinary working people, we will never drive up the profitability or sustainability of family farms? It is the Conservative party, with its Budget choices, that devastated our rural communities, and only a Labour Government will focus on improving living standards for every single person living in my constituency of North Warwickshire and Bedworth.

[James Murray]

I thank my hon. Friend for her intervention. She is absolutely right about the importance of repairing the public finances and supporting public services, for her constituents in North Warwickshire and Bedworth and indeed for all of our constituents across the country.

I noted that, in her contribution earlier, my hon. Friend made a point about what this Government are doing to support the profitability of the farming sector. She may have seen that, at the Oxford farming conference in January, the Secretary of State for Environment, Food and Rural Affairs set out the Government’s long-term vision. That includes reforms to use the Government’s own purchasing power to make sure that we are buying more British food, planning reforms to speed up the delivery of infrastructure, and work to ensure supply chain fairness, which will help people involved in the farming industry and more widely, across her constituency and those of other Members here today.

As I said, the decision that we took to reform agricultural property relief and business property relief was one of the difficult but necessary decisions that we needed to take on tax, welfare and spending to restore economic stability, to fix the public finances and to support public services, including an NHS in crisis. We have taken those decisions in a way that makes the tax system fairer and more sustainable.

The reforms to agricultural property relief and business property relief mean that, despite the tough fiscal context, the Government will still maintain significant levels of relief from inheritance tax beyond what is available to others. The Government recognise the role that these reliefs play, particularly in supporting small farms and businesses, and, under our reforms, they will continue to play that role.

The case for reform is underlined by the fact that the full, unlimited exemption, as introduced in 1992, has become unsustainable. Under the current system, the benefit of the 100% relief on business and agricultural assets is heavily skewed towards the wealthiest estates. According to the latest data from HMRC, and as hon. Members have mentioned, 40% of agricultural property relief benefits the top 7% of estates making claims—that is 117 estates claiming £219 million-worth of relief.

[Dave Doogan]

On the point the Minister just made about the notional value of estates, I think I can help him, because that is where he is going wrong, and where he has taken his Government up an agricultural cul-de-sac. When it comes to agriculture, what is important is not the notional value of the estate, but how someone came by that estate—whether they used billions of pounds of money on which they should have been paying tax in order not to pay tax, or whether they inherited the family farm from the generation that went before. That is the differentiation that the Treasury should be making. The value is irrelevant; the Minister should focus on the nature of the inheritance or acquisition.

[James Murray]

What has driven the Government in making the decision to reform agricultural and business property relief is the overwhelming priority of fixing the public finances in a fair and sustainable way. That is why the statistics to which I just referred, about how agricultural and business property relief have come to be used in recent years, are important for understanding the context in which we decided that the time for reform was now.

[Charlie Dewhirst]

rose—

[Ben Lake (Ceredigion Preseli) (PC)]

rose—

[James Murray]

I will respond fully to the point made by the hon. Member for Angus and Perthshire Glens (Dave Doogan) first. As I was saying before he intervened, the data from HMRC, to which other Members have referred, shows that 40% of agricultural property relief benefits the top 7% of estates. It is a similar picture for business property relief, more than 50% of which is claimed by just 4% of estates—that equates to 158 estates claiming £558 million in tax relief. Given the wider pressures on the public finances, we do not believe that that is fair or sustainable, and we felt it was appropriate to reform how the reliefs operate.

[Graham Stuart]

To follow up on the earlier question that I channelled in the Minister’s direction, will he say something about the average profitability of family farms? That puts this in context.

[James Murray]

Earlier in the debate, we heard that the average return on capital is 0.5%, but I am sure that the right hon. Gentleman will be aware that 10% of farms in England have made a return on capital of 10%, so it is perhaps a more complicated picture than the one presented earlier. Similarly, farm business income, which is net profit, shows a wide variation. In designing the reforms, we obviously considered the fact that those who have assets on which they currently claim agricultural or business property relief still need to have generous relief. That is inherent in the design of the reforms that we are proposing: there is full 100% relief for the first £1 million of assets—above other nil-rate bands, spousal transfers and so on—and then effectively an unlimited 50% relief thereafter.

[Graham Stuart]

I thank the Minister for his answer and for telling us about the variation, which I am sure is there, but will he provide the average or median, to give us a sense of the situation for the vast bulk, rather than the top 10%? What does the average or median look like? What is the reality for most farms up and down this country?

[James Murray]

I thank the right hon. Gentleman for his further intervention. In understanding how the reliefs are reformed, the important point is to focus our conclusions on the data on claims. In understanding how many estates are likely to be affected by the changes, the data that matters is the data on claims. That is why the information that I was setting out around where the bulk of the relief currently goes is based on claims data. In a moment I will come to some other statistics that were referred to in the debate.

[Ben Lake]

rose—

[Mr Carmichael]

rose—

[James Murray]

I will make a little progress, and then take interventions in a second.

The data that I just referred to on where the relief currently goes—I was going to address in a moment the data on how many estates making claims we think will be affected in 2026-27—is based on actual claims, so we believe it is the right data on which to base the reforms.

[Damian Hinds]

Will the Minister give way?

[James Murray]

I will take interventions in a moment, but let me make a little progress. Based on the statistics I have just set out, which show where the bulk of the benefit from agricultural property relief and business property relief has been going, we felt it was appropriate to reform how those reliefs operate. That is why the Government decided to change how we target agricultural property relief and business property relief from April 2026. As I have said, we are doing so in a way that maintains significant tax relief for all estates, including for small farms and businesses, while making sure that we repair the public finances.

Under the reforms that we have announced, all individuals will, of course, be able to access the general nil-rate bands and spousal exemptions that apply within the inheritance tax system. On top of those allowances, any business and agricultural property within people’s estates will benefit from 100% relief on a further £1 million of combined assets, except in cases of shares designated as “not listed” on the markets of recognised stock exchanges. Beyond the £1 million of full relief, a further 50% relief will apply with no limit. That means that any inheritance tax paid will be at a reduced effective rate of up to 20%, rather than the standard 40%.

[Mr Carmichael]

Does the Minister not understand that by penalising family farming at the same time as offering the 20% threshold, he leaves a situation in which purchasing land is still an attractive option for those who wish to shelter their wealth? He penalises those he wants to protect while protecting those he seeks to penalise.

[James Murray]

I thank the right hon. Gentleman for his intervention, but let us consider those who will still have generous protection from inheritance tax under the reformed system that we have announced. I point the right hon. Gentleman towards the fact that the reliefs in the reformed system, when taken together with the spousal exemptions and the nil-rate bands, will mean that, depending on people’s individual circumstances, up to £3 million can be passed on by a couple to their children or grandchildren, free of any inheritance tax.

[Ben Lake]

There has been much debate about the discrepancies between the estimate of the Treasury, which states that some 500 farms will be affected every year, and the estimates from the NFU, the Farmers’ Union of Wales, the CAAV, the AHDB—I could name a few more. Is the Minister not concerned, and should it not give the Government pause for thought, that the Central Association for Agricultural Valuers has estimated that in Wales alone the proposals will make an extra 200 family farms subject to an inheritance tax liability? If we are to believe the Government’s estimates, that would constitute 40% of the UK total.

[James Murray]

I am about to come to some of the statistics to which the hon. Gentleman and others referred. I do not have much time, so I will make a little progress before answering some of those questions.

On the point of how the nil-rate band and spousal exemption allowances work together, anything beyond the nil-rate band, the spousal transfers and the 100% full relief will receive unlimited 50% relief, and heirs can spread any payments due over 10 years, interest free. That is a benefit not seen anywhere else in the inheritance tax system.

[Mike Wood]

Will the Minister give way?

[Caroline Voaden]

Will the Minister give way?

[James Murray]

I will make some progress and turn to the impact that the reforms will have on taxpayers, because there has been a lot of discussion of the impacts, and of the numbers that various Members have highlighted during the debate. As the Government have set out in recent months, in ’26-27 up to 520 estates claiming agricultural property relief, including those that also claim business property relief, are expected to pay more as a result of this change. That means that around three quarters of estates claiming agricultural property relief, including those that also claim business property relief, will not pay more tax as a result of the changes.

[Harriet Cross]

Will the Minister give way?

[James Murray]

I will make some progress.

The Liberal Democrat spokesperson, the hon. Member for Glastonbury and Somerton (Sarah Dyke), asked how the figures were arrived at. The figure to which I referred—520 estates likely to be affected in ’26-27—comes from taking the historical data and projecting it forward using economic determinants. She may have seen the letter sent by the Chancellor to the Treasury Committee in November, which set out how that calculation was done. I suggest that all Members read that letter to understand the basis for that 520 number.

The statistics also show how many estates claiming business property relief are likely to be affected. Around three quarters of estates claiming business property relief alone, excluding those only holding alternative investment market shares, will not pay any more inheritance tax in 2026-27. The Office for Budget Responsibility has been clear that it does not expect this measure to have any significant macroeconomic impacts.

I recognise the disagreement over this policy, but Ministers and officials have been listening carefully to the views of the farming sector and rural communities. Ahead of the Budget, there was media speculation that the Government were going to abolish the reliefs altogether. In reaction to that speculation, the Treasury received and considered several representations from the farming sector with views on retaining the reliefs. I responded to a debate on the matter in this very room on 17 October.

[John Lamont]

Will the Minister give way?

[James Murray]

I have only a few minutes left, so I will not.

I have also participated in several meetings with farming bodies since the autumn Budget 2024, and I am meeting farming bodies again shortly to discuss their concerns further. At the same time, it is important to recognise that other organisations have called for the reliefs to be abolished or restricted. Commentators have highlighted that the reliefs currently contribute to an inheritance tax system that means that the very largest estates pay lower effective tax rates than smaller estates. As the Institute for Fiscal Studies has set out since the Budget, the changes we announced will still leave farmland much more lightly taxed than other assets.

I want to address as many of the points that Members made during the debate as possible, but it is worth saying first that it is important to see the changes in the context of wider support for farmers and the rural community. The Budget committed £5 billion to farming over the next two years, including the biggest budget for sustainable food production in our history. It committed £60 million to help farmers affected by the unprecedented wet weather last year, and we are protecting farms and rural businesses by committing £2.4 billion over the next two years to rebuild crumbling flood defences.

We will also continue to provide existing support for the farming industry in the wider tax system. That includes, for example, the exemption from business rates for agricultural land and buildings, and the ongoing entitlement for vehicles and machinery used in agriculture to use red diesel, as the hon. Member for Dumfries and Galloway (John Cooper) mentioned.

On the point made by the right hon. Member for Orkney and Shetland (Mr Carmichael) about the inheritance tax treatment of Scottish agricultural leases, the Government are aware of the issue and officials have already discussed it with their counterparts in the Scottish Government. There is an existing provision in the Inheritance Tax Act 1984 that deals explicitly with the Scottish agricultural leases. Section 177 of the Inheritance Tax Act means that Scottish agricultural leases passed down on death are not included in the value of the estate.

[Wendy Chamberlain]

On that point, will the Minister give way?

[James Murray]

I have only a few moments, so I will not.

My hon. Friend the Member for North Northumberland (David Smith) asked about introducing a working farmer test. I draw his attention to the fact that a test where relief was provided only if, among other things, the individual received 75% of their income from agriculture did exist in the UK for a short period, between 1975 and 1981. It was removed, however, because of concerns about its impact on the availability of land for tenant farming.

Finally, I will address an issue raised by a number of Members, including the hon. Members for North Cornwall (Ben Maguire) and for Chester South and Eddisbury (Aphra Brandreth), about mental health among the farming community. The Government are committed to supporting farmers and agricultural workers in accessing the support they need to protect their mental health. DEFRA already works with a range of farming charities including the Royal Agricultural Benevolent Institution and Yellow Wellies, which was mentioned by the Liberal Democrat spokesperson. Those organisations have highlighted the mental health challenges for farming communities more generally.

To conclude, as we have heard, the reforms to inheritance tax generate strong views, and I understand that. I recognise that a small number of estates will have to pay more tax, but the reform of the reliefs is necessary given the fiscal challenge that confronts us and the fact that the bulk of the cost of the reliefs had become skewed towards the wealthiest estates. We must put our public finances back on a stable footing and repair our broken public services. We are doing so in a way that involves tough decisions but is as fair as possible and preserves significant relief from inheritance tax for small farms and businesses.

[Julia Buckley]

On a point of order, Dr Murrison. The manner in which the shadow Minister described the view that a farmer was better off if he committed suicide before April 2026 was highly irresponsible. This is a public debate on a very emotive subject. It is televised and it is being shared across social media in real time. This is not the moment to encourage anyone to consider suicide. Farmers’ anxiety and concerns about mental health are running high, and this is the moment to engage constructively with the Treasury, and with farmers and the NFU, who have been in dialogue, to seek the transition to tapered support that I referred to in my intervention, to avoid the very scenario that the shadow Minister repeated.

Every Member here cares for our farmers; it is the reason that has brought us all from different parties together to discuss this matter in a respectful manner. In the interests—[Interruption.] Dr Murrison, may I finish? In the interests of mature and responsible debate, will the shadow Minister kindly correct the record to show that he does not condone suicide but encourages constructive dialogue?

[Dr Andrew Murrison (in the Chair)]

I am grateful to the hon. Lady for giving me notice of her point of order. As she probably knows, it is not a point of order, but her remarks are now on the record.

[Robbie Moore]

Further to that point of order, Dr Murrison. In my contribution, I was making very clear the live and real conversations, concerns, queries and frustrations that have been brought forward not only to me in my position as shadow farming Minister but to other Members on this side of the House and, indeed, to organisations that sit outside this House, namely those representing the farming community. These are real live issues and representations that have been brought to us. Therefore, I do think it is just and right to use my role as the shadow farming Minister to bring before this House, in front of the Government Minister, those very live concerns and real conversations that are happening in many family farm homes just now.

[Dr Andrew Murrison (in the Chair)]

The shadow Minister will know that is not a point or order either, but his remarks are on the record.

19:27

[Ben Goldsborough]

Time is short. The tradition is that I would normally thank every individual who has spoken, but there is not enough time for that. I thank everyone for the wide engagement across all political parties in Parliament, and I thank everyone for trying to take this debate forward in a better sense, with honesty, openness and transparency.

I also thank colleagues in the NFU. Today, I hosted an event in Parliament, and I know they have been sitting patiently not only at the back of the Chamber but outside, listening to the words that we say, because the words that we say in this Chamber carry a huge amount of weight. Going forward, these conversations will continue in the back rooms and in the corridors, to make sure that our farmers’ voices are heard and that we do not use events like this for grandstanding. As much as the right hon. Member for Beverley and Holderness (Graham Stuart) may regard my style as vanilla, I say to him in jest that vanilla is the favourite flavour of ice cream in the United Kingdom, so I will take that as a win.

Question put,

That this House has considered e-petition 700138 relating to Inheritance Tax relief for working farms.

The Chair’s opinion as to the decision of the Question was challenged.

Question not decided (Standing Order No. 10(13)).

19:29

Sitting adjourned.