Family Farming in Devon

Caroline Voaden Excerpts

Tuesday 3rd December 2024 Westminster Hall

[Caroline Voaden (South Devon) (LD)]

It is a pleasure to serve under your chairmanship, Sir Mark. I thank the right hon. and learned Member for Torridge and Tavistock (Sir Geoffrey Cox) for securing this important debate, and for his lyrical introduction to the subject. It is clear from all hon. Members who have contributed that much is at stake for our rural economy.

In Devon, family farms are an essential part of our community and the economy, as they are elsewhere—I refer to the contributions from the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Winchester (Dr Chambers), who talked of their areas. In Devon, farms cover 1.2 million acres of land and employ more than 20,000 people. Agriculture is the backbone of our local economy. From grazing livestock to growing crops, Devon’s farmers produce not just food but the character of our rural landscape.

The right hon. and learned Member for Torridge and Tavistock spoke of the preciousness of our farms and the decades of heritage, of which we are rightly proud. However, the Government’s changes to inheritance tax and agricultural property relief are concerning. The Government claim that 73% of farms will be unaffected by the changes, but as the NFU has pointed out, those figures are based on historical claims and fail to account for the current state of the agricultural sector. For example, 66% of farms in England have a net value of more than £1 million, and 42% of farms are larger than 50 acres, so many will now be above the £1 million threshold.

The burden that that will place on farmers cannot be overstated, especially given the other financial pressures that they have faced over the past few years. They are struggling with skyrocketing costs, since energy and feed prices have risen due to the invasion of Ukraine. Many are still reeling from the Conservatives’ botched trade deals, which have placed further stress on the farming community. The recent increase in national insurance contributions and the impending carbon tax on fertiliser further compounds the challenges. I will read some quotations from local farmers who we surveyed, 86% of whom say they will be hit by the tax, while 50% of those farms are not owned by a couple, so they already lose out on a chunk of the potential tax relief:

“We are now in process of winding down all investment and food production on this farm in response to the budget. Producing food is difficult and carries lots of financial risk—we will keep farming but at a much lower level and look to pass the farm on early as lifetime transfer. Doesn’t sound like ‘growth’ to me…Our farming income for the last 2 financial years has been a loss (mainly due to weather). It feels so hard. This policy just knocks the confidence out…The policy as it currently stands will halve food production in a generation…If this rule stays what is the point of investing in your farm to improve efficiency. All our input costs are going to increase through labour costs and taxes…Through previous governments, we’ve been encouraged to diversify in order to augment our farm income and stay afloat. Now we feel we’ll be penalised for this as we have added value to our farm which will now be liable for Inheritance tax…I feel completely let down and saddened. This will completely destroy the rural community.”

Farmers will be forced to sell land—the very tool by which they produce food and earn a living—that has been in their families for generations—[Interruption.] The Minister is shaking his head, but every single farmer I have spoken to says that that is the case. The idea that neighbouring or tenant farmers will just buy up the land is a fantasy. Most will not be able to afford it, and land may well end up being bought by non-farming companies with no interest in food production and used instead for carbon offsetting or potential development.

One family now face the prospect of having to sell at least a quarter of their assets, including tractors, sheep and land, just to pay the tax. They tell me that, rather than investing and growing their business, they are now having to wind down their farm with a view to reducing their future tax liabilities. That is a deeply worrying trend, as it could lead to a broad contraction of the sector, harming not just farmers but the entire agricultural industry. The Liberal Democrat position is clear: the tax will disproportionately harm the farming community, and we call for the Government to rethink it.

But it is not just farmers. The impact on rural businesses that rely on the farming economy, such as vets, agricultural merchants and machinery suppliers, will be severe. Local suppliers of agricultural machinery and heavy equipment already face a significant increase in costs due to national insurance changes. Those businesses are vital to the farming economy. Again, a contraction of the sector will have a ripple effect throughout the entire rural economy.

It is crucial to note that the DEFRA budget for day-to-day spending is set to drop by 1.9% over the next two years, and the pause on capital grants is yet another worry, particularly for farmers who are doing their best to comply with environmental measures such as safe slurry storage. If the grants are not available to do that work, that makes sustainable farming even harder to achieve.

The sustainable farming incentive, which should provide support to farmers, has proven unworkable for many, and the transition from basic payments to ELMs has been complicated and unnecessarily slow—an indication of the lack of foresight and planning by the previous Government to prepare for a potential withdrawal from the EU. Even though I am no fan of Brexit, what could have given a real boost to both British agriculture and the environment has instead been a bureaucratic mess and a clear sign of how rural communities are so often the lowest priority for Government.

Talking of environmental payments, I want to take a quick moment to underline how important it is for the Government to make the schemes work. Unless we restore the health of our soils and the biodiversity that has been decimated across the UK, our farmers will find it harder and harder to produce quality food. If we are to mitigate flooding, increase water quality and combat carbon emissions, we simply must do this work. As the right hon. and learned Member for Torridge and Tavistock, the hon. Member for South West Devon (Rebecca Smith) and my hon. Friend the Member for Honiton and Sidmouth (Richard Foord) have mentioned, that is really important on Dartmoor, a small part of which also falls in my constituency. This will mean a complex conversation about farming, stocking levels and sites of special scientific interest. I look forward to working with my colleagues to try to find solutions.

Environmental payments are fundamental to the future of good food production. Lower inputs are good for everyone—for nature and the farmer’s back pocket. It is not an either/or—farming or the environment. We simply have to make this work.

Finally, I share something deeply troubling, which I heard from farmers in my constituency when they came to Westminster last week. Some talked about the need to hide shotguns in order to prevent older owners of the family farm from taking their own lives before the inheritance tax changes come into force. They now feel that they are worth more dead than alive because of the burden those taxes would place on their families. My hon. Friend the Member for Honiton and Sidmouth also touched on that topic. We know that poor mental health is already rife in the farming community, and the sudden tax change has placed an added pressure, which could prove fatal. No farmer should ever feel that their legacy and livelihood are so threatened that it would drive them to such despair.

In response to those challenges, the Liberal Democrats are calling for a £1 billion increase in the farming budget, and for the Government to reverse their decision on agricultural property relief. We understand the importance of ensuring that family farms can continue to operate and thrive. Family farms are not only vital for our food security and the preservation of our rural environment, but central to the history and heritage of our country. The Liberal Democrats will continue to fight for the future of family farming, to ensure that our rural communities thrive, and to ensure that farmers’ voices are heard loud and clear in Westminster.

--- Later in debate ---

[Daniel Zeichner]

That will be debated further. On our side, the debate will be led by Treasury Ministers who are in a better position to answer those kinds of questions. However, the complexity and the different range of set-ups and structures that family businesses have makes it difficult to make that assessment. The hon. Gentleman will know that when it comes to legislation, there will be a full assessment and we can look into those details then. I stand by the figures that the Treasury has given us. We expect that the changes will affect only around 500 claims for agricultural property relief in 2026-27, so we believe it is a fair and balanced approach.

[Caroline Voaden]

I would like to ask the Minister whether the Treasury consulted DEFRA on the tax change before deciding to go ahead with it in the Budget.

[Daniel Zeichner]

The hon. Lady will know that we are one Government and we stand together. Going forward, we are picking up the mess that we inherited, and that is the problem we face. On each of these issues in turn, we have to answer the basic question: who will fix the economic mess? The answer is this Government.