Farming and Inheritance Tax
Alicia Kearns Excerpts(2 weeks, 5 days ago)
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Alicia Kearns (Rutland and Stamford) (Con)
Given that he appears to be leading for the Government on this issue, rather than the Secretary of State for Environment, Food and Rural Affairs, can the Minister tell me how many farmers he has met personally over the last three months? He seems very confident about how this will affect them. The exact number, please, of the farmers you have met personally over that period.
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. The hon. Lady should ask how many farmers the Minister has met, rather than how many I have met.
Mr Carmichael
I think I just said more or less exactly that. A debate of the sort that I am talking about would have allowed for a wider debate about farming finances. We have had 70 years of very direct Government intervention in the agricultural economy through farm subsidies. Taking a step back, critical though those farm subsidies are, their net effect has ultimately been to keep farmers poor. There is now such an enormous mismatch between the capital value of the assets being farmed and the derisory return on them. DEFRA tells us that there is a 0.5% return on capital. Farmers in my constituency tell me that a £3 million farm will give them an income of about £25,000 a year. That is pretty much in line with DEFRA’s figures.
We hear about farmers working into their 80s. It is a slightly patronising and very romantic view of doughty farmers working on into their 80s because they are seized with a sense of vocation. There absolutely is a sense of vocation among farmers, but let us not forget that a lot of them work into their 70s and 80s because they have been running businesses that have had no spare money to put into a pension so that they can look after themselves in their old age.
Alicia Kearns
The right hon. Gentleman makes an important point about just how little farmers earn, and yet they are consistently being described by Labour Members as asset-rich. Should farmers not fall into their definition of working people, and therefore Labour should be on their side rather than what they are doing to them?
Mr Carmichael
“Working people” hardly does justice to farmers. Some of my young constituents told me they were working for returns of about £6 an hour. There is a reason I chose not to become a farmer at 16 and why I thought law was a more attractive career opportunity to pursue, but I bow to no one in my admiration for those who make that choice.
Of course, there is the question of those who have made their estate planning decisions on the basis of APR being available. Others have pointed to that, but it is absolutely critical, and it goes beyond estate planning. I wonder how many farmers over the years decided in a divorce settlement to take the farm as their part of the capital, because they have a familial and emotional connection to the land, and are now finding that what looked like an equitable settlement a few years ago risks being much more inequitable.
The particular opportunity I fear we have missed is that in relation to tenant farmers. The Tenant Farmers Association came up with an excellent proposal, which would reward landlords who grant leases in excess of 10 years with exemption from inheritance tax liability. That would be good for the very people who everybody on both sides of the House says they want to help: the small family farmers. There are multiple reasons why people might buy up agricultural land. I do not know anybody who takes an agricultural tenancy thinking that it will make them a member of the super-rich as a result.
The idea that is being mooted of a clawback—something on which we could see a bit of a sensible discussion and a consensus between the Front Benches—or the idea of a suspended inheritance tax liability which would crystallise only at the point of the land sale after the death of the owner, would both work to keep land in active food production. The irony of the way in which the Government have structured the measure is that, by allowing a 50% relief on farmland above £1 million, the purchase of agricultural land will probably remain an attractive proposition for the super-rich.
We have reached a point in the debate where we need to broaden it out beyond just inheritance tax, and look at the wider question of farming finance and ask ourselves how we can build a consensus that puts farming and food production at the heart of the countryside, where it truly belongs.
Employer National Insurance Contributions
Alicia Kearns Excerpts(2 weeks, 5 days ago)
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Alicia Kearns (Rutland and Stamford) (Con)
The Budget forced businesses to compromise on growth—those are the words of the CEO of the Confederation of British Industry. The OBR has said that the jobs tax will reduce wages by £7.5 billion and increase inflation. Both the OBR and the CBI say that it will result in higher prices, so it is no surprise that, over the past few weeks, my inbox has been full of local organisations that are gravely concerned about this £25 billion stealth tax. We are shocked, and they are heartbroken, because Labour promised not to raise national insurance. Indeed, the then shadow Chancellor called it a jobs tax, and said that Labour would never pursue such a thing.
Of the organisations that have written to me, which are the most worried? St Barnabas Lincolnshire, Lincolnshire and Nottinghamshire air ambulance, Uppingham GP practice and Stamford GP practice—the Royal College of GPs has said that it will cost 2.2 million appointments to service these increases—as well as the Vista (The Royal Leicestershire Rutland and Wycliffe Society for the Blind), local nurseries, my local citizens advice, and my care agencies and hospitality businesses have all written to me. As we approached Small Business Saturday, I had my independent shop competition, where around 100,000 votes were cast for the favourite local independent businesses, but those businesses are writing to me to tell me how worried they are. Family businesses are particularly worried. The tax will affect rural communities most of all, because they have smaller margins—they are already worried about farmers going out of business, on whom they are reliant—and we have small, symbiotic communities who support one another.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
The hon. Lady is making an important point about the impact the changes will have on small businesses. In 2021, she voted for the Health and Social Care Levy Act 2021. I have checked Hansard, and she mentioned none of these concerns in 2021. That Act introduced an increase of 1.25 percentage points in national insurance for employers and employees. This is a smaller rise, and it protects employees. Can the hon. Lady say why all of a sudden she is now concerned, when three years ago she was not?
Alicia Kearns
The hon. Gentleman may not realise, but at that point we were just coming out of something called the pandemic, and it was a health and social care vote, so yes, I absolutely voted to do what we needed to do at that point in time. It was a specific levy to raise specific funds for our health and social care. I will happily stand behind that vote.
It is interesting, because this tax will make it harder for businesses to recruit; indeed, it will cost three times the price, at about £800 per employee. That is not how to get growth. It is how to lose staff as employers let people go; how to see increased demands on our welfare budgets; how to kill off our town centres; how to see hospices closed; and how to see local authorities ending up reducing services.
Several hon. Members rose—
Alicia Kearns
No, I will not give way.
It will be how charities end up redirecting their Christmas appeals, so that people give the pennies they have spare to pay the Exchequer, rather than to support those who are most desperate—those on whom charities should be spending their money.
This change is the largest tax grab of Labour’s Budget, and it will impact women and young people most of all. Yet there is an absence of speeches from the Government Benches about its impact on those who will be most affected. Employers are the growth makers, and they are begging Labour to reverse this tax, but working people will be those worst affected. There is still time for Labour to reverse course—to listen and to recognise that the ideology it is pursuing is going to harm our communities. It is time for Labour to think about the impact and reconsider what it is doing, particularly to our GP practices and others—I look forward to hearing from the Minister when I share the letters with him. It is not too late. Labour must reverse course and fundamentally change its ways.
VAT: Independent Schools
Alicia Kearns Excerpts(2 months, 2 weeks ago)
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Damian Hinds
No, independent schools do pay tax on supplies. No tax is charged on education, whether in an independent school or in other settings, and that is a very long-standing principle.
Let me clear up one very important definitional point, which I ask colleagues to reflect on. There is no tax break involved. It would be a tax break if a person who had a child at an independent school and was not taking a place at a state school were charged less tax as a result. That does not happen in the United Kingdom. Everybody contributes to state sector education, whether or not they take up a place.
The principle of no tax on learning is a fast one, and once we loosen it, we do not know where we will go. Where might the Treasury look next? Private nurseries, perhaps? Music lessons? Private tutoring? What is the philosophical difference between independent school education and private tutoring?
Alicia Kearns (Rutland and Stamford) (Con)
Let me make a point to demonstrate how rushed and ill thought through this policy is. My understanding is that if a child in a nursery has turned five but the other children in the class have not, all the parents in that nursery year will have to pay VAT on their child’s nursery fees. That is how badly this has been thought through.
Damian Hinds
My hon. Friend is right. That comes from the rushed nature of the legislation. The sloppy drafting means that children who are not of school age get dragged into this tax if they happen to be in the same room as children who are, and there are concerns about what might follow in other borderline cases.
The Government claim that the policy is about revenue, not politics, but having read the Secretary of State’s twitterings, I think hon. Members could be forgiven for mistaking the motivation. It is entirely spurious, for multiple reasons, to link this tax to 6,500 teachers, mental health support or anything else. The money will go into general Exchequer receipts, and anyway, 6,500 teachers is not that many in the scheme of things, given the 468,000 there are now. That is a compound growth rate of 0.3% over five years—and, by the way, a lot fewer teachers than we recruited in the last five years. Mental health support teams are already being rolled out, and they cover primary schools as well as secondary schools. It is not clear what the difference is in the new Government’s policy on mental health support, other than that it will not include primary schools.
To the extent that the VAT revenue could be hypothecated, it looks a lot more like that revenue would reduce cuts to education resourcing, rather than increasing it. If the policy is about revenue, not politics, the Government could easily commit to one simple thing today. They are confident, they tell us, that the policy will raise a large sum of money and not create large costs. Will they commit to measuring and reporting back on that, and if it turns out, against expectations, that they were wrong, will they reverse it?
James Murray
I am not quite sure what happened there, but I will carry on. I was making an important point, which is that the Government will monitor closely the impact of our policy changes on affected diplomatic and military families, with any changes to the scheme being considered as part of the ongoing spending review.
James Murray
I will make a bit of progress. In our consultation on the technical detail of this policy, we have been engaging widely and in depth, and the views of MPs are an important part of that. As I said earlier, it has been a tough but necessary decision to end tax breaks for private schools. We believe it is the right decision, and one we need to implement as soon as possible to help raise the funding that we need to deliver our priorities for state education in this country. We are determined to make sure that education, which is available for all, is of the highest possible quality, because that is how we ensure that we meet the aspiration of every parent to get the best possible education for their children.
Alicia Kearns (Rutland and Stamford) (Con)
I welcome the hon. and gallant Member for North East Derbyshire (Louise Jones) to her place. We need more people in Parliament who have service in their hearts. I also thank her for her good comments about her predecessor and in particular for her comments about Corporal Riley, which I know my hon. Friend the Member for Huntingdon (Ben Obese-Jecty) felt deeply. I thank her for taking the time to do that.
Sadly, I turn to a decision by the Government that does not have service to the country at its heart. This is a cruel, vindictive policy that will damage the prospects of children in both state and independent schooling. It is particularly damaging also for rural economies, which seem to have been entirely overlooked. In Rutland and Stamford, we have 10 independent schools that cater for a vast number of pupils—particularly those from military families and those with SEND—and what is common to all those families is how hard they work for their children to have the right education for them.
I have received heartbreaking emails from parents who have had to sacrifice the education they have worked so hard for. One was from a mother of twins who are midway through their GCSE year. There is no space in the state sector for them—twins who now question whether they will be able to sit their GCSEs because of this policy.
The entire county of Rutland has zero available state school spaces in years 10 and 11, and only three SEND spaces.
Ben Coleman
I am most grateful to the hon. Member. Does she not think that a little bit of an apology from her and her colleagues for the disgraceful SEND system that they left as a legacy is merited? As people cannot get EHCPs or support in the state sector, and councils and cash-strapped families are turning to the private sector, should she not apologise for the legacy that she and her colleagues have left the country?
Alicia Kearns
I am so pleased that the hon. Gentleman is repeating the lines that the Whips gave him for this morning’s Westminster Hall debate. I was not talking about SEND. It is deeply discourteous to the House to intervene on a Member with a point that is completely separate from the point that they are making; he will come to learn that in time.
As I said, the entire county of Rutland has zero available state school places for years 10 and 11. That means children will now not be able to get their education. I ask the Minister directly: what would he say to 16-year-olds who are to be forced out of their school in January with no alternative place to go and nowhere to do their studies? This is a vindictive policy, and it is absolutely wrong.
I want to touch on the contribution to local rural economies. In Rutland, education is the biggest single employer. As I said, we have 10 schools across 11 sites. In 2022-23, one secondary school in Rutland and Stamford contributed £50 million to UK GDP. It contributed £30 million to local GDP, £14 million was paid in tax to HMRC, and savings of £5.5 million were made to local schools through school places that were not taken. Some 70% of this school’s expenditure is on staffing and, with the imposition of VAT, it is forecast to make a loss for the first time ever. Jobs are being lost. When 70% of the budget is staffing, what does a school do? Cuts have to be made in people’s jobs. More than 2,000 people locally are employed directly by independent schools, and that is not to mention those working in the supply chain, whether driving buses, providing food or flowers, or working in cafés and shops. Rural economies do not have many options at the moment, and independent schools are a bedrock for them. The economic impact of these jobs on rural communities should be considered in an impact assessment, but I very much doubt one has been carried out.
Looking at the national economic picture, the Adam Smith Institute concluded that every child in independent schooling contributes £28,000 to the public finances. The average £2,700 saved on VAT makes a return to the taxpayer of 1,040%. If 5% of independent school pupils leave, the Government will generate £1 billion through this policy. If 10% to 15% of pupils leave, the Government will generate no revenue. If 25% of pupils leave, the Government will lose £1.58 billion, because they are doing something vindictive and wrong.
Richard Foord (Honiton and Sidmouth) (LD)
Does the hon. Lady agree that people putting their children through independent school are paying twice? They pay once through their fees and once through income tax. If they are removed from the system, that will mean less money for education.
Alicia Kearns
The hon. Gentleman is absolutely right. These parents have already paid into the state school system as if their child were going to state school, and they are net contributors to the local education system and the tax system, because they have chosen to ease the pressures on state schools by taking their child out. This is basic economics, and that is why the Government do not understand it.
Independent schools make a huge and optional contribution to the national teachers’ pension scheme. Some could choose to mitigate their increased costs from the imposition of VAT by opting out of the TPS. What assessment has the Minister made of the impact that this would have on the financial viability of the TPS?
Additionally, a number of independent schools in my constituency provide homes for children in foster care who would otherwise have no stability. These are the kind of schemes they will have to stop. That will again result in increased costs and impact on the state sector, which will have to pick these things up.
It is a long-standing international norm to exempt education from sales taxes. Nurseries, universities, tutors and other education providers are not included in Labour’s proposed VAT increase, although as per my intervention on my right hon. Friend the Member for East Hampshire (Damian Hinds), there is a toddler tax, which any parent with a five-year-old child in nursery school will suddenly find themselves paying. It is ironic that the Labour party says that it believes in free university education for all, yet many who take up apprenticeships or go into work will not go to university. Why does Labour think that all of us who do not go to university should pay for other people to go to university, but somehow, when it comes to this issue, we should pay for others?
There is also a question about the legality. Senior lawyers, including Lord Pannick, have argued that this proposal will breach European convention on human rights rules on educational choice and access. What assessment have the Government made of the legality of this policy?
I am already seeing the damage of this policy in the heartbreaking dilemmas facing families who have contacted me for help. For some pupils halfway through their exam years, there are no places in the state system. The requests are clear: the Government must delay the implementation until at least the end of this school year, so that children are not disrupted in their education. We need to exempt those pupils in years 10 to 13, so they can take their exams without the added pressure of a school move. We need to help local authorities to boost EHCP assessments rapidly, and we need to undertake a regional assessment of available state school places to exempt pupils who live in areas with no availability, such as Rutland.
I understand that the Labour party wants to make an ideological attack on education and choice, but I urge Ministers to sit down and think this through. The richest will continue to attend private schools and absorb the increased costs, while families who sacrifice day after day will suffer. For those who are interested, I did go to my local comprehensive, and my children go to their local comprehensive, but I think it is right that we support choice for all. Tony Blair once said, “Education, education, education.” I urge the Minister to listen to the ghosts of Labour past and to do what is right for all children at both state and private schools, not what is right for reasons of ideological dogma, which is what the Labour party is currently doing day after day.
Several hon. Members rose—
Winter Fuel Payment
Alicia Kearns Excerpts(3 months, 1 week ago)
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Alicia Kearns (Rutland and Stamford) (Con)
I rise to speak on behalf of the 20,800 pensioners in Rutland, Stamford and the Harborough and South Kesteven villages who will lose their winter fuel payment this winter. This decision affects millions of people who bought into our country’s social contract: you work hard, you pay your taxes and when you grow old, we will support you through your retirement.
I make two requests of the Labour Government, although I know that they will both be rejected. First, I ask them to delay implementation to give people more time to prepare. Older people are some of the most financially cautious in our society. They save, they go without, they avoid debt, and they give what they can to their children, their grandchildren and their friends in need. A delay of a year would give people the time to claim pension credit, if eligible, to face the upcoming increase in energy bills and to plan for the next winter.
Secondly, I ask the Government to give an exemption to anyone suffering from a chronic or life-shortening illness. Since this cut was announced, I have heard from so many people, including Di, who emailed me out of concern not for herself, but for her husband Jeff, who suffers from cancer and has to wear three layers of clothes all year round, even in the summer. As Di put it, the decision—and it is a decision by the Prime Minister—is penalising the ill. Her “hubby will suffer” and she is shattered.
We will hear a lot from the Government about hard choices, but if I were asked to choose between heating the homes of the elderly, cancer sufferers and dementia sufferers or giving a no-strings-attached pay rise to train drivers already on nearly £70,000, the choice would be pretty damn obvious to me. But then, ASLEF did not donate to my election campaign.
People say that we can tell a lot about a society by how it treats its most vulnerable and its eldest. If we apply that test to this cut, anyone with a heart will know that it is wrong. I, for one, will never vote to deprive the most vulnerable and our elderly of warmth.
Public Spending: Inheritance
Alicia Kearns Excerpts(4 months, 3 weeks ago)
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Rachel Reeves
I thank my hon. Friend for that question. We were determined to protect the most vulnerable, which is why we made the decision to ensure that the winter fuel payment would still be paid to the poorest pensioners on pension credit. More than that, we will work with local government and charities to increase the take-up of pension credit, so that everybody who deserves pension credit gets it, and with it the winter fuel payment.
Alicia Kearns (Rutland and Stamford) (Con)
We all remember Gordon Brown’s raid on pensions. It has taken just three weeks for Labour to revert to type, and it is pensioners who are suffering most. Martin Lewis has already criticised the decision online. On the estimates, the right hon. Lady cannot claim that, when permanent secretaries were signing off these estimates—over the weekend, I assume—they did not know about these supposed holes, but if that is so and they did sign them off with holes in them, that would be a breach of their legal duties. So will she be investigating them, or will she be apologising to them for throwing them under the bus today?
Rachel Reeves
Instead of blaming civil servants, the hon. Lady should blame the people who are really responsible, and that is the previous Government. The country did the right thing by kicking them out three weeks ago. They deserve never to get their hands on power again.