Small Farms and Family Businesses

Baroness Foster of Aghadrumsee Excerpts

Thursday 12th December 2024 Lords Chamber

[Baroness Foster of Aghadrumsee (Non-Afl)]

My Lords, I thank the noble Earl for bringing this debate to the House, as it is of fundamental importance that we discuss the impact of the recent Budget on the UK’s rural community. Obviously, it would have been preferable that the discussion on the impact of the Budget measures had been assessed before their announcement, but that was not what the Government chose on this occasion. It means that policy decisions have been made on flawed data.

We have heard much from the Government about how the changes to agricultural property relief will impact on only relatively few farming families, but the reality is somewhat different, certainly in Northern Ireland. This week the Department of Agriculture, Environment and Rural Affairs in Northern Ireland published an analysis of the impact of the budgetary measures. The figures are stark. The price of land in Northern Ireland is high, for a variety of reasons, and the latest government figures for 2026 projecting forward are that it will cost £21,000 per acre. That figure covers agriculture and business property on farms. This means that farms that own greater than 19.5 hectares of agricultural land will be caught by the new measures announced in the Budget. That is 50% of the farms in Northern Ireland. Those figures are not from farmers or their union, the UFU, but from the government department in Northern Ireland. Even more striking is that this covers 80% of total farmed land in Northern Ireland.

I think noble Lords will agree that those are devastating figures, which is why solutions will have to be found before 2026. Food security for the whole of the UK is at risk. Why do I say that? Noble Lords will say, “Surely Northern Ireland is only a small part of the equation”. It is true that we have a population of only 1.9 million, but our farmers produce enough food for 10 million people, and 6 million of them are here in Great Britain. As a former Economy Minister in Northern Ireland, I know the importance of the agri-food industry very well. It is simply the largest economic driver in Northern Ireland. That is why these new tax rules will have a disproportionate impact in Northern Ireland, on not just our rural communities but our economic well-being.

The next issue is that these tax rules, if implemented in full, will cut to the very heart of the fabric of rural Ulster. If farms have to be sold to pay tax bills, families will leave the rural way of life. That will bring hugely negative changes to our society. Schools, rural shops, churches, sporting organisations—life will fundamentally change if there are fewer rural dwellers. Of course, farmland is not just an asset; it is a legacy, a symbol of perseverance, and a promise to future generations. We have to allow that promise to be fulfilled.

The well-being of our rural dwellers is also of huge concern. We all know that farming is a solitary profession, and mental ill-health is often an undiagnosed issue. The implications of the tax burden have added to farmers’ worries, and that cannot be dismissed. I commend the National Farmers’ Union’s president on trying to explain the emotional stress yesterday to the Select Committee in the other place. Whether you are an elderly farmer worrying about estate planning or a young farmer wondering whether it is worth the worry taking on the debt that you would have to take on to keep the family farm going, it is a really worrying time. Yes, farmers are particularly bad at succession planning—I used to be a country solicitor before I entered politics, so I know it all too well—but they often work for very little just to have the hope of handing on the farm to the next generation. This policy threatens that hope and adds to the growing burden on farmers. They are already under pressure from government regulation and supermarket powers.

So solutions have to be found. Of course, I would prefer the tax to be scrapped but, if that does not find favour with the Treasury, please set the threshold much higher—so you are not attacking the rural way of life—or have a definition of an active farmer and exempt active farmers from the tax. That would deal with those who are buying up farmland for other purposes. That is what happens in Germany and the Republic of Ireland, so solutions are available. I really hope the Government take the time to listen to those solutions, because farmers are fair people and it is wrong to attack their way of life.