Autumn Budget 2024

Baroness Humphreys Excerpts

Monday 11th November 2024 Lords Chamber

[Baroness Humphreys (LD)]

My Lords, I make no apology for dedicating my allotted five minutes to the situation facing farmers in Wales. I associate myself with all noble Lords who have spoken on APR and thank them for their insightful comments.

The president of NFU Cymru has called the reforms to agricultural property relief and business property relief announced in the Budget “misguided” and “ill thought out” and described the impact of the reforms as “feeling like a betrayal” to the farming and food and drink industry, a sector worth £9.3 billion to the Welsh economy. Until a couple of months before the Autumn Budget, farming unions had been assured by the Prime Minister and the Treasury that there would be no changes to inheritance tax. Doubts began to surface, and then Budget Day confirmed farmers’ worst fears.

A paper from the Farmers’ Union of Wales explains how inheritance tax relief, through APR, has helped and incentivised Welsh family farms to pass from one generation to another by ensuring that those who inherit the farms are not crippled by taxes. Previous Governments have all recognised the need to safeguard our Welsh food production and food security by avoiding the adverse effects on rural businesses and employment that a heavy tax burden would bring. The FUW points out:

“Whilst a million pounds may appear to be a huge sum for those outside the industry, for many Welsh farmsteads, even a conservative estimate of the value of accumulated land and infrastructure could see the £1m threshold easily breached”.


What many outside the industry do not recognise is that a farmer’s wealth lies in his or her property and land. In reality, farms are small businesses operating on slim financial margins, and many are struggling. Having to meet such death duties as the Government are imposing could lead to the break-up of family farms.

Over the weekend, I was contacted by two farmers from mid-Wales through my researcher. The first one, the mother of a farmer, told me about her family who have farmed their land in mid-Wales for nine generations. She explained that her son, who runs their large farm full-time, will have to sell the farm when he inherits it to pay the inheritance tax bill. She says that even though they have diversified and converted derelict barns into holiday lets, it is a struggle to make ends meet. The second was a farmer whose parents came to mid-Wales to be tenant farmers in 1950. The family then bought a farm, but the issue is the same: they would have to sell because of the inheritance tax burden. Their stories are heartbreaking.

Farmers are rightly proud of what they have achieved. They see themselves as custodians of the land, as their families were before them, and their ambition is to hand on the farm to the next generation as a viable business so that they can continue their prime function: to use the land to feed the nation. On top of the challenges of Brexit, an unfavourable trade deal with Australia that saw Australian sheepmeat exports to the UK surge by 85%, the impact of Covid and the pressure of reforestation, this new threat has added another dimension of worry to an already pressured workforce.

A briefing by PD Tax Consultants explains why APR was introduced in 1984. It was implemented

“because the tax charges that would arise without the reliefs were viewed as having a ‘damaging effect on risk taking and enterprise within a particularly important sector of the economy’”.

Could the Minister please explain at what point during the couple of months before the APR and BPR U-turn in the Budget did the Government decide that removing the reliefs would not have a damaging effect on risk-taking and enterprise? What evidence influenced that decision? Why do the Government no longer see the farming industry as a particularly important sector of the economy, as other Governments have done up to now?