Small Farms and Family Businesses

Baroness Shephard of Northwold Excerpts

Thursday 12th December 2024 Lords Chamber

[Baroness Shephard of Northwold (Con)]

My Lords, I congratulate my noble friend on calling this debate and on bringing to it his customary knowledge and experience. It is a pleasure to follow the right reverend Prelate the Bishop of Norwich: that is three speakers from Norfolk already in this debate.

The tax changes for farmers announced in the Budget have sent shockwaves through every rural community in the land. People feel betrayed—we have heard evidence of that—and let down by the Government, and with reason. Why? Because the Labour manifesto promised that it would champion British farmers, because Keir Starmer’s pre-election speech to the NFU promised a constructive relationship with the farming industry and because, as we have heard this afternoon, government departments apparently cannot agree on how many firms will be affected. I believe that the Treasury is claiming that it is only a quarter—but it would, wouldn’t it? Defra, which was not consulted, claim that it will be two-thirds. This is not a good basis for a farm business plan.

All this follows cuts to grants for nature restoration and for the promotion of British food and the pausing of capital grant offers. Every rural community will be affected, and this matters. Our farmers produce 60% of our food. Food security becomes ever more important when the incoming United States President is telling the world that “tariff” is the most beautiful word in the language. It is important because farmers care for 70% of our land. They are the guardians of our countryside and environment. Above all, it is important because the rural economy depends heavily on the prosperity and stability of the farming sector. The Government so far show no sign of understanding this basic fact, although they should after this debate. They should, at least, act on the recently revised advice from the IFS and tweak their plans.

I have comments from three businesses based in north-east Norfolk. Nicholsons, a farm machinery business established in 1937, faces a huge annual rise in wage costs from national insurance increases. It says that uncertainty over the the future of family farms will reduce its income, with the consequence that:

“Investment in people, infrastructure and technology will have to further reduce … firms will fail”


and jobs will be lost. The second comment is from a large animal veterinary practice with 23 staff. Because of the national insurance increases, it has to increase its fees. The director fears that, because of the Budget changes for farmers, the practice and all such practices will lose many of their farm customers, with dire consequences for the whole veterinary profession.

The third comment concerns grain merchants. Mr Dewing writes that, as a result of tax changes for farmers, the farming industry will focus on holding on to cash, reducing capital investment, employee numbers and investment in diversity projects. He adds:

“The Budget is killing employment, investment, UK family businesses, rural economies and structures, confidence in government, and the future of an industry which once ‘dug for victory’”.


The Government must change their mind.