Earl of Devon
Main Page: Earl of Devon (Crossbench - Excepted Hereditary)Department Debates - View all Earl of Devon's debates with the HM Treasury
(2 days, 9 hours ago)
Lords ChamberMy Lords, having trussed themselves into a fiscal straitjacket to get elected, the Government are to be admired for achieving a Budget that delivers both short and long-term investment in public services without spooking the bond markets. To achieve this without raising taxes on working Britons—however they may be defied—has required some notable contortions. One was the decision to revalue government debt—an alchemy I will not pretend to understand but which I suspect may come back to bite us. The second, on which I will focus, is to lay the fiscal burden on small and medium-size enterprise, the engine of our economy, which the Government also expect to drive their growth agenda. I am not an economist, but I am not confident that SMEs can deliver both tax and growth. I will speak to the impact of the Budget on rural Devon, where I live and operate a family-owned heritage and farm business.
The headline has been the fundamental changes to agricultural property relief, APR, and BPR, the impact of which will be earth-shattering for many family-owned farm businesses with elderly proprietors who have long-planned successions dependent upon those exclusions. Having repeatedly promised, both during the election and since, that no changes would be made, it is disappointing that such a fundamental adjustment to the taxation of family farms is proposed without consultation and seemingly without any consensus on its likely impact. The figures put forward by the Treasury are hotly contested by the NFU, the CLA and others, creating unnecessary and damaging mistrust across rural communities.
I implore the Government to think again and to consider how the potentially disastrous impacts of this proposal for family farms—which are so central to food security and the rural economy—can be ameliorated. Get it wrong and we lose many hundreds of family farms, which will be swallowed up by commercial farming interests replete with the professional advice and corporate structures that will navigate the Chancellor’s family farms death tax. Maybe this is what the Government desire.
In some respects, the phasing out of APR, if properly planned and delivered, could be beneficial. It may encourage the transfer of family-owned farms and other rural businesses earlier in life, thereby decreasing the average age of farmers and increasing productivity. I note my own interests as a farmer and land manager who underwent succession not long ago. I recall vividly my disappointment when realisation dawned that it would be most efficient for my father to own the business at the moment when he died. As a relatively young farmer with, hopefully, time on my side, I am not our concern. As proprietor of a 28th-generation family enterprise, whose forebears steered our ever-dwindling resources through rapacious capital taxes, civil wars, attainders, beheadings and the theft of the Isle of Wight, I am not our concern. Our concerns must be for those distressed farmers who cannot readily afford professional advice, whose meagre earnings afford them no provision for retirement and who may not have seven years left to live. They are very afraid right now. I was with a number of such neighbours over the weekend and, having toiled for decades with little reward—save the knowledge that their farm will stay with their family—they are bereft and confused. This treatment by the Government is cruel.
Also confused are the professional advisers charged by the Government with guiding those poor farmers through the transition. They complain of a surprising lack of policy detail and uncertainty over how the changes will be implemented. There is no clarity on the application of rules for lifetime gifts and no information on how the changes will apply to trusts or the apportionment of APR within the 10-year principal charges; there is uncertainty regarding the transfer of farming assets between spouses; and it is totally unclear whether there will be interest charges when paying inheritance tax in instalments.
The Budget has other considerable impacts on farming. The carbon border adjustment mechanism, by which the Government intend to levy a carbon tax on imported fertiliser, will have a huge impact on the cost of food grown domestically in comparison with imported food. Given that we no longer produce fertiliser in the UK, a carbon tax will be levied indirectly on all fertilised produce grown in Britain, yet there is no proposal to tax imported food for fertiliser used overseas.
While the Government’s commitment to the agricultural budget is appreciated, in particular their confirmation of funds to support ELMS, the commitment is only short-term. Given that agricultural budgets are planned over multiple harvests, sudden changes are hard to adjust to. Therefore, the accelerated decoupling from BPS will cause a number of already stressed farms to face yet further hardship. This will not assist in our environmental goals.
Finally, the most significant tax increase is that levied on the costs of employment. Given the amount of economic activity in the south-west peninsula that is found in employment-heavy, low-margin sectors such as food processing and hospitality, this will hit the whole region particularly hard. What assessment have the Government made of the regional impact of the increase in employers’ NIC and the minimum wage? Can the Minister provide any assurance that it will not unevenly impact our rural economy?