Inheritance Tax Relief: Farms

Catherine Fookes Excerpts

Monday 10th February 2025 Westminster Hall

[Ben Goldsborough]

I am about to share the testimonies of my local farmers in South Norfolk. All too often as politicians we are keen to take the limelight for ourselves instead of listening to those on the ground who want us to put forward their opinions, which is what I am about to do.

One of my local farmers, Will, asked me to share his words:

“The government’s decision to make major changes to APR and BPR”—

business property relief—

“will spell the end for many family farms. Before this announcement, agriculture was already going through a difficult period and for many farmers, this news has left them without hope.”

Another farmer, Robert, wished for me to say:

“We are trapped with no way to mitigate against the effects of this cruel tax. Farming is who we are, it’s in our blood, it’s all we want to do.”

And another farmer, Tim, requested that I share this:

“I have spent my entire working life trying to build this farm up and have added about 200 acres in my time. I see myself as a custodian of the land which I know like the back of my hand and I feel responsible for it…to have to sell would be devastating and would go against all that I have worked for.”

Will, Robert and Tim all fear the significant consequences of the proposed APR changes on smaller family farmers, and I believe that their views are shared by many farmers who have historically operated under a 100% agricultural property relief system. There is no getting away from their genuine concerns and I know that, in his response, my hon. Friend the Minister will address those feelings in the sensitive manner required.

There can be no doubt that the arguments that land values are artificially high due to APR have credence. It is also undeniably true that we see non-farmers buying land for tax-efficiency reasons. Neither of those trends are positive but, to be clear, that does not mean that farmers are wrong when they raise concerns about paying a large one-off inheritance tax bill with anything other than the land they need to keep their heads above water, even if the bill is spread over 10 years.

The proposed policy change has arguably pointed to a fundamental issue for agriculture, which is the annual profitability of British farms. There is significant work for the Government to do to ensure that farms up and down the UK become more profitable during this Parliament, and I know the Minister is working hard on that.

[Catherine Fookes (Monmouthshire) (Lab)]

I thank my hon. Friend for introducing the petition, which some Monmouthshire farmers have signed. Does he agree with the policy of our Labour Government to protect farmers through trade deals, unlike the Conservative party, which unfortunately signed trade deals that flooded our high streets and towns with foreign imports? That protection would really help the profitability of farms.

[Ben Goldsborough]

This debate has created a space in which we can talk about other issues that affect farms. The hon. Member for Epping Forest (Dr Hudson) and I had an amazing debate on biosecurity in the UK, and there was cross-party consensus on many issues. There are also the issues with the sustainable farming initiative, payments through the basic payment schemes and the future of the environmental land management schemes. There is so much we need to do, including through trade deals. I thank my hon. Friend for her intervention.

I have touched on some of our farmers’ concerns, but facts and figures are also important. I apologise in advance, but the next bit of my speech may be a bit dry. The most recent data shows that the top 7% of inheritance tax relief claims accounts for 40% of the total cost of agricultural property relief—that is a value of £219 million. The top 2%—just 37 claims—accounted for 22% of the total cost of the relief and was worth £119 million. This is factual data, and in this context the Government’s ambition for implementing this policy is sound: to end the system by which the very wealthiest in this country can avoid huge sums of inheritance tax by buying up land.

The petitioners argue that the proposed policy changes will not achieve that ambition because not just the wealthiest landowners will be impacted. The CLA estimates that capping agricultural property relief at £1 million could impact 70,000 UK farms. The NFU estimates that 75% of commercial family farms will exceed the £1 million cap, which of course can rise to £3 million under certain conditions. Petitioners and local farmers regularly remind me that not every farmer is married or lives in a farmhouse in their own name.

By contrast, the Treasury projects that around only 500 estates will be affected each year, based on historical claims. The IFS and the CLA both independently acknowledged in discussions with me that it is hard to project revenue or impact because behavioural changes are extremely hard to account for. It is clear, however, that the behavioural changes required by farmers will be enormous.

--- Later in debate ---

[David Smith (North Northumberland) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Edward. I have held dozens and dozens of conversations with farmers across my constituency of North Northumberland. It has become clear to me that they welcome the principle of this policy, which is to stop the super-wealthy from minimising their tax liabilities by land banking with agricultural land. Not one of those farmers told me that they have a problem with the aim of the policy: to stop the wealthy avoiding tax. However, in the same conversations, many of the farmers told me that they are concerned that their businesses will be adversely affected. I wonder, therefore, if the relief element of the policy could be recalibrated.

The Government’s aim is to support our farmers and our food security, but we are doing that in a context where Tory inaction over 14 years has left great challenges, including climate change, a muddled and chaotic Brexit, and, as we have heard, deals on lamb and beef that our farmers are concerned about. We are not working in a vacuum. I am the first Labour MP in history for the vast majority of my constituency; that is not because the population were happy with what the Conservatives delivered for the countryside and farmers. I ask the Government to consider whether the balance is right. I have spoken to farmers in my constituency whose farms are worth £5 million, £8 million, £20 million and everything in between.

[Catherine Fookes]

Yesterday I visited Emma, a dairy farmer in my constituency. She still has a mortgage on her farm, which means that she cannot pass it on now. How might the inheritance tax work for her?

[David Smith]

Our farmers are facing a great many challenges, including being very over-leveraged in debt, and we should consider that. I spoke to one farmer whose land is valued at £16 million, so their new inheritance tax liability will be about £2.8 million, but they make just £96,000 profit per year. There are several examples of farmers who have low profits but face enormous bills.

Crown Estate Bill [Lords]

Catherine Fookes Excerpts

2nd reading
Tuesday 7th January 2025 Commons Chamber

[Llinos Medi (Ynys Môn) (PC)]

The Crown Estate owns 65% of Wales’s foreshore and riverbeds, and more than 50,000 acres of land. Recent rising demand for renewable energy projects has resulted in the value of the land sky-rocketing. In 2007, the asset value of the Crown Estate in Wales was £21.1 million, and in 2023 this reached £853 million. Correspondingly, profits generated from these assets have also increased. Net revenue profit across the Crown Estate rose from £345 million in 2020 to £1.1 billion in 2024. Profits generated from Wales’s natural resources are, however, not retained for the Welsh public purse; instead they leave Wales and are sent to the Treasury and the sovereign grant. In contrast, in Scotland the Crown Estate is devolved and profits from Scottish natural resources are transferred to the Scottish Government. In 2024 the sum was estimated to be a record £108.3 million. How can the Government justify Welsh profits being sent to the Treasury and the monarch when in Scotland they are held back and put back into the Scottish purse? The situation is worse than that, with Welsh councils having to pay lease fees simply to use the land which is owned by the Crown Estate. In 2023 the sum was nearly £300,000. With huge pressures on council budgets, how can that be justified?

In the age of coal, Wales saw a huge extraction of wealth from our communities. In 2025, Wales is now experiencing a similar process of extraction of our green wealth.

[Catherine Fookes (Monmouthshire) (Lab)]

The reality is that Plaid Cymru Members are divided on this issue and are confused as well. Their colleagues in the other place supported provisions in this Bill to create a new commissioner with special responsibility for Wales, yet now the hon. Member is saying only devolution will do. Why does she think Plaid Cymru colleagues in the other place are wrong?

Oral Answers to Questions

Catherine Fookes Excerpts

Tuesday 3rd September 2024 Commons Chamber

[Damien Egan (Bristol North East) (Lab)]

9. What progress she has made on increasing economic growth.

[Catherine Fookes (Monmouthshire) (Lab)]

22. What progress she has made on increasing economic growth.

[The Chancellor of the Exchequer (Rachel Reeves)]

Sustained economic growth is the only route to improving the prosperity of our country and the living standards of working people. That is why we have already taken a number of actions to begin delivering on our growth mission —the No. 1 priority of this new Labour Government—which includes a series of planning reforms to get Britain building; the establishment of a national wealth fund to bring in private sector investment; the announcement of a pensions review to unlock growth, boost investment and deliver better returns to pensioners; the launch of Skills England; and the announcement of the forthcoming White Paper on getting Britain working again. This Government are determined to boost growth and improve living standards, and, by doing so, to have the money that we need to fund our vital public services.

[Rachel Reeves]

My hon. Friend is absolutely right to make that point. The Government are committed to delivering longer-term certainty for local authorities, as part of our wider commitment to a more empowered, accountable and sustainable local government system that will support strong public services in all our communities. The Government will set out further details on our plans for local government funding in the upcoming Budget and spending review on 30 October.

[Catherine Fookes]

This year alone, two more high street bank branches have closed in Monmouthshire, bringing the total to eight in the past two years. My constituents now find themselves struggling to access basic banking services—particularly in Caldicot. I was recently handed a petition that had been signed by more than 3,500 constituents. I am sure that the Chancellor understands the importance of high street banking not only to our constituents but to local businesses and local economic growth. What progress has she made in her work with colleagues in the Welsh Government to support high street banks and hubs in Monmouthshire and across Wales?