Small Farms and Family Businesses

Lord Marlesford Excerpts

Thursday 12th December 2024 Lords Chamber

[Lord Marlesford (Con)]

My Lords, I declare an interest as a Suffolk farmer of a certain age. Since the dawn of civilisation, family farming has provided seed for enterprise, food and survival. Yet these retrospective IHT proposals have been widely perceived, not just by Britain’s farmers, as a betrayal of the rural community. In politics, perception is reality. To persist with these proposals could, as the noble Baroness, Lady Mallalieu, suggested, cost Labour 100 seats at the next election.

In any Government, the relationship between Prime Minister and Chancellor is crucial, and it can be sensitive. We remember that between Margaret Thatcher and Nigel Lawson, or Tony Blair and Gordon Brown. Much depends on the public and political standing of the Chancellor. Five months ago, Rachel Reeves arrived at the Treasury flourishing a sparkling CV that might have even suggested she could be a future Governor of the Bank of England. The media searchlights have now illuminated the realities of her skills and experience, however. She will never again, I suspect, be able to avoid pre-Budget political and economic scrutiny of her plans from her senior colleagues, such as Mr Pat McFadden.

So far, the Chancellor has rejected all requests to reconsider the IHT proposals. I will remind your Lordships of a precedent which, I suggest, could be a way out. It means going back 50 years to the 1974 Budget of Chancellor Denis Healey. This proposed the introduction of an annual wealth tax, something that had been in Harold Wilson’s February manifesto. A Green Paper came out in August 1974, with the promise of a White Paper to follow. There was consequent alarm that the effect on cash flows would force many SMEs out of business. In response, in December 1974 the Commons set up the Select Committee on Wealth Tax. It reported in November 1975 that the Government had failed to recognise

“the special dangers inherent in introducing such a tax at a time of … economic crisis”.

On 29 November 1976, Denis Healey, in a Written Answer said:

“The Government have decided they should not introduce a wealth tax in the life of this Parliament, but the tax will continue to be an important part of their programme”.—[Official Report, Commons, 29/11/1976; col. 49W.]


So it has been for the last 50 years.

Healey related the outcome in his 1989 autobiography, The Time of My Life:

“Another lesson was that you should never commit yourself in Opposition to new taxes unless you have a very good idea how they will operate in practice. We had committed ourselves to a Wealth Tax: but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle”.


If Denis Healey could change his mind, surely the Prime Minister could at least have second thoughts.