Agricultural Property Relief and Business Property Relief

Dan Tomlinson Excerpts

Monday 5th January 2026 Commons Chamber

[Victoria Atkins (Louth and Horncastle) (Con)]

(Urgent Question): To ask the Chancellor of the Exchequer if she will make a statement on the changes to agricultural property relief and business property relief.

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I thank the shadow Secretary of State for Environment, Food and Rural Affairs for asking this question. I wish a happy new year to her and to all Members of the House.

The reforms announced in December go further to protect more farms and businesses while maintaining the core principle that more valuable agricultural and business assets should not receive unlimited relief.

The allowance for the 100% rate of relief for agricultural property relief and business property relief will be increased from £1 million to £2.5 million when it is introduced in April. That means that a couple will now be able to pass on up to £5 million of agricultural or business assets tax-free between them, on top of the existing allowances such as the nil rate band. Taken together with the reform announced at the recent Budget, widows and widowers will benefit from up to £2.5 million of their spouse’s allowance, even if their spouse passed away many years ago.

Our changes further reduce the number of estates forecast to pay more inheritance tax, and they further reduce the liability for many of the remaining estates. Compared with Budget 2025, the number of estates claiming APR—including those also claiming BPR—affected by the reforms in the coming tax year is expected to halve, from what would have been 375 estates to just 185 estates. That means that around 85% of estates claiming agricultural property relief in 2026-27 are forecast to pay no more inheritance tax on their estates under the changes.

The Government have announced these changes after listening carefully to feedback from the farming community and family businesses, and I am pleased that the National Farmers’ Union and others have welcomed the changes. Even after the reforms, the Government expect to raise around £300 million in 2029-30 from our changes to these tax reliefs. We are making fair and responsible choices to support the farming community, with a record £11.8 billion investment in sustainable farming and food production over this Parliament, and to modernise our tax system for the future.

[Victoria Atkins]

Thank you, Mr Speaker, for granting this first urgent question of 2026—and what a way to open the new year, with yet another Government U-turn. But where is the Chancellor of the Exchequer? This is her tax and her U-turn, and she should explain why she did not announce this at the Budget. Over the past 14 months, farmers, rural communities and the Conservatives have campaigned relentlessly in and out of Westminster against these vindictive taxes. This U-turn acknowledges what farmers have been telling the Government from day one: Ministers have got their maths badly wrong, and many more farms and family businesses will be broken up as a result of Labour’s higher taxes. Does the Minister accept that?

Why have the Government U-turned? Does it have anything to do with the recent Labour Back-Bench rebellion? Can the Minister tell the House how many family farms and non-farming family businesses will still have to pay this death tax? Are tenant farmers included, given that the now Chief Secretary to the Treasury admitted at the time that 14,000 tenant farmers were missed out of the Government’s original calculations? Can the Minister also confirm whether he signed the tax information and impact note for this U-turn before the Budget?

This partial U-turn does not save every family farm and family business. Indeed, for many the U-turn simply comes too late; we have seen record farm closures under this Government, and it has taken a great personal toll on many families. Given the pain, anguish, distress and, in some cases, sorrow that this cruel tax has caused families up and down the country, will the Minister now have the good grace to apologise on behalf of the Government to farmers and family business owners?

[Dan Tomlinson]

The Government announced the change in December because we had continued to listen to the representatives of family businesses and the farming community. I note that the National Farmers’ Union and others have welcomed the change, which will increase the threshold from £1 million to £2.5 million.

I think it is the right change to make, and it ensures that we get the balance right. We are still raising £300 million from the very largest estates. If the Conservatives would prefer not to raise that money and give a £1 million tax cut to an estate worth £10 million, that is their choice. It is not our choice. We think we have got to the right place on this policy and are striking the right balance—both raising revenue from those with the very largest estates, and making sure that we have a higher threshold. Because of the changes we announced at the Budget, someone in a couple will now be able to pass on up to £5 million.

I can confirm to the House that I did not sign the tax information note for the change that was announced on 23 December before the Budget. On the numbers, as I said, the number of estates affected who claim agricultural property relief—including those also claiming BPR—is expected to halve, from 375 to 185.

[Jim Dickson (Dartford) (Lab)]

Happy new year to you, Mr Speaker. I thank the Minister for his answer. I was pleased to meet NFU representatives for Dartford and for Kent in late 2024 and January 2025. Following those meetings, I passed on the view to Treasury Ministers that it was right for the Government to close the inheritance tax loophole and stop the price of farmland from being inflated by people purchasing that land to avoid inheritance tax, but that the threshold should be set at a significantly higher level to reduce the risk of smaller family businesses being affected by the changes. Does the Minister agree that the reliefs are now fairer to family farms but will still achieve their purpose of reducing tax sheltering and raising vital revenue for public services?

[Dan Tomlinson]

Yes, I do believe that we have got the balance right. It is worth noting that the top 4% of claims accounted for over half the Exchequer cost of business property relief and the top 7% of claims accounted for 40% of the Exchequer cost of agricultural property relief. That is hundreds of millions of pounds in tax that was forgone but will now be raised under these changes from the very largest estates. I thank my hon. Friend for his engagement on this issue over recent weeks and months.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Happy new year to you, Mr Speaker, and to House staff and all Members in the Chamber. This policy was a disaster from the get-go. It came with no warning, no consultation and no clue. The Liberal Democrats were the first party to point out the damage it would do to family farms. We have repeatedly and clearly highlighted that it would fail to tackle the loopholes exploited by private equity companies but hammer the family farm, damaging our food security in the process. The changes are welcome, but they do not touch the sides, and they are a clear admission by the Government that they have got it badly wrong.

There is now only one sensible course of action left: to scrap the policy in its entirety. Will the Government now do that? If not, the Liberal Democrats will table amendments to the Finance Bill to bring this measure down. Will the Government allow a free vote so that those on their own Benches who want to vote against the measure are free to do so?

[Dan Tomlinson]

I am always interested in reading Liberal Democrat amendments, even though none of them will ever get passed in this House—not least on this measure, where we have got to the right position. The changes that will be in the Finance Bill will raise about £300 million. It is a legitimate position for the Liberal Democrats to say they do not wish to raise that revenue and that instead they would borrow more money or cut public spending on services like our NHS. That is not our position. We think that this is a fair and proportionate reform.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

I welcome this sensible compromise and point out that the £800 million put into the environmental land management scheme in 2023-24 will become £2 billion by 2028-29, along with the sustainable farming incentive being reintroduced in April, the land use framework and the farming road map. Does the Minister agree that the Labour Government are now well on track to raise food security and help our family farmers?

[Dan Tomlinson]

I thank my hon. Friend for her question and for her work on the Environment, Food and Rural Affairs Committee on this and many other important issues that affect rural communities up and down the country, as well as in her constituency—a fantastic part of the world that I am sure I will be able to visit soon. She is right that the Government are taking steps—for example, through our £11.8 billion fund to support sustainable farming and food production—and I look forward to working with Ministers in other Departments and across Government to ensure that we continue to support our rural and farming communities.

[Mr Speaker]

I call the Chair of the Environment, Food and Rural Affairs Committee.

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[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I welcome this announcement and I pay the warmest possible tribute to the farming unions and others whose tireless campaigning since the Budget of 2024 has made this happen. These changes make the policy better, but that is not the same as saying that they make it good. It is surely bizarre that in 2025, two farms could both be valued at £5 million but one of them would pass free of inheritance tax while the other had an inheritance tax bill of £500,000. Surely the Government now have to publish the impact assessment that they have presumably done so that we can all see the reasons for this change and have some confidence that they have got the figures right this time.

[Dan Tomlinson]

The figures that the Government have published on this change and at previous Budgets are drawn from actual claims and from engagement with His Majesty’s Revenue and Customs on both APR and BPR. That analysis shows that before this change, up to 275 estates a year would have been affected, and that that number is now forecast to halve to around 185. That means that around 85% of all estates claiming APR, some with BPR, will now not pay any additional tax. I stand by those figures. We published them when we made the decision and they are included in the letter that I and the Secretary of State have sent to all Members.

On the right hon. Member’s point about £2.5 million or £5 million, I think he was referring to the fact that a couple can pass on up to £5 million and for a single person it is £2.5 million. That is a long-standing position. It means that the inheritance tax nil rate band and the residence nil rate band are transferable only between spouses and civil partners. Making any unused allowance transferable in the same way is consistent with that long-standing approach.

[Lizzi Collinge (Morecambe and Lunesdale) (Lab)]

My constituents very much welcome the changes to agricultural property relief and business property relief, which, as the Minister knows, I have raised repeatedly. The changes to the reliefs mean that family farms will be protected while large landowners who bought agricultural land simply to avoid paying tax will no longer have that loophole. Does the Minister agree that these changes show that the Labour Government are listening to rural areas and to rural Labour MPs, and that, unlike the Opposition, they are serious about proper policy development and not just headline chasing?

[Dan Tomlinson]

My hon. Friend is right to say that we on this side of the House are the true and better representatives of the rural community. There are over 150 MPs on this side of the House who represent rural or semi-rural constituencies—I believe that there are as many Labour MPs representing rural constituencies as there are MPs on the blue Opposition Benches.

[Mr Speaker]

I call the Chair of the Public Accounts Committee.

[Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)]

Thank you, Mr Speaker, and a happy new year to you and your staff. Farmers in my constituency will welcome this change to the thresholds for APR and BPR. However, it took 14 months to achieve it and rural communities really do feel discriminated against by some of the measures that this Government are taking against them. I ask the Minister to convey to his colleague, the Minister for Food Security and Rural Affairs, who is sitting on the Treasury Bench, that the Government should not enact any changes to shooting or trail hunting, because to do so would really damage and annoy rural communities?

[Dan Tomlinson]

We will be going ahead with the changes that were set out in our manifesto and that have been announced recently. I think that that is the right thing for us to do.

[Jenny Riddell-Carpenter (Suffolk Coastal) (Lab)]

Happy new year to you and the team, Mr Speaker.

I start by thanking the Minister and his Department for working actively with rural colleagues and myself for the last 14 months. In the many conversations that we have had, both face to face and in wider correspondence, we have set out the huge number of issues that are well known to this House, but at the heart of this, and the reason that so many of us are concerned, is the lack of profitability in farming. Baroness Batters’ report will go a huge way towards addressing some of the systemic issues in farming, but does the Minister agree that we also need to tackle supermarkets and unfair practices and to address lots of the long-standing issues, and that the Treasury as a whole needs to continue to engage with rural MPs to make sure that we introduce further reforms to support farming profitability?

[Dan Tomlinson]

I thank my hon. Friend, too, for her work on the Select Committee, and for representing rural communities, including hers. My understanding is that Ministers in the Department for Environment, Food and Rural Affairs and the Government are looking at what more we can do to ensure that farmers receive a fair price for their products. Of course, we support having a competitive supermarket and retail system in this country, so that we can have low prices for consumers, but we have to ensure that those prices are fair for farmers, and for the communities up and down the country that we rely on to produce good British produce.

[Sir Julian Smith (Skipton and Ripon) (Con)]

This policy has caused huge stress for rural communities across North Yorkshire. What discussions is the Minister having inside government about other policies, such as the policy on rates for public houses in rural areas, to ensure that this error is not made again?

[Dan Tomlinson]

Of course, as the tax Minister—that is why I am at the Dispatch Box today, to address a point made earlier—I look continually at what improvements we can make to our tax system to ensure that we continue to support both rural and urban constituencies and communities up and down the country. If there are changes that the right hon. Member would like to see, he is of course welcome to write to me, on that or any other matter.

[Tonia Antoniazzi (Gower) (Lab)]

I have worked extensively with the National Farmers Union and its Welsh branch, and with the Ulster Farmers’ Union in Northern Ireland. These changes are very much welcome, but I say to the Minister—and to the Minister for Food Security and Rural Affairs, who is sitting next to him—that it is important that we have these conversations with Labour MPs and Members from across the House at every opportunity, because this has damaged our farming communities. I also have no truck with what the Opposition say, because I have been in opposition and I know what it is like. Conservative Members let our farmers down. We are getting to the heart of this, fixing the situation, and supporting our rural communities properly, and I welcome the changes, especially for my constituents in Gower.

[Dan Tomlinson]

I thank my hon. Friend for her contribution, for the experience and expertise that she brings to the House as Chair of the Select Committee, and for the important work that she has done on this and other issues. The changes that we have made to this policy mean that it is now fair and balanced, and protects more farms. As I have said, the number of estates expected to pay more tax will halve. We Labour Members and the Government can hopefully continue to focus on what we can do to support our farming and rural communities—for example, on the £11.8 billion of investment that we are putting in over the course of this Parliament.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Our farming and rural communities in Cumbria and right across Britain should be utterly proud of themselves, because this U-turn is their victory, and I pay tribute to them. However, the appalling emotional and economic damage done to farmers over the last 14 months has been cruel and will have a lasting impact. Will the Minister apologise to the farming community for the last 14 months, and recognise that many hill farms in Cumbria will still be hit by this tax, because they are worth more than £2.5 million, although their average income is less than the minimum wage? Does this tax not remain an attack on British farming and on food security?

[Dan Tomlinson]

If the Government had not made these changes in December, Opposition Members would have been standing here asking us to make those changes. We are coming forward with a revised position—we are increasing the threshold from £1 million to £2.5 million—and Members are criticising us for that change. We think it is the right thing to do, and we are doing it in good time—before the Finance (No.2) Bill, in which these changes will be made, is voted into law later this year.

Yes, some estates—the very largest—will continue to pay more after these changes, but it is worth bearing in mind that, relative to the position of a few months ago, estates worth £2.5 million will now pay significantly less; there is a £300,000 reduction in their tax liability. For an estate worth £5 million, it is a £600,000 reduction. These are significant reductions in the amount of tax that the very largest estates will have to pay, but we do think that it is right and fair to continue with a reform that strikes the right balance between the need to raise more revenue and the need to protect smaller family farms.

[Sadik Al-Hassan (North Somerset) (Lab)]

I wish you, my constituents in North Somerset, House staff and hon. Members a happy new year, Mr Speaker. I welcome the Government’s decision to amend the thresholds for APR and BPR, as do rural communities in my constituency, and extend my thanks to the organisations that campaigned for this outcome, such as the NFU. However, this is only one part of a larger problem. For 50 years, our country has witnessed the gradual erosion of our rural community sustainability, national food security and farm profitability. I look forward to 2026 being the year that the farming sector gets the wider change that it needs in order for the new year to be happy and profitable.

[Dan Tomlinson]

I wish my hon. Friend’s constituents a happy new year. The Batters review, which was published just a few weeks ago, set out ideas that the Government can take forward to ensure that farming can be profitable and sustainable. I know that Ministers in the Department for Environment, Food and Rural Affairs and across Government will continue to work on those important objectives.

[Sir John Whittingdale (Maldon) (Con)]

Although I welcome this announcement, which directly contradicts what the Secretary of State told me and my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins) on the day that the House rose for Christmas, is the Minister aware that a significant number of my constituents who farm in the Dengie peninsula and elsewhere will still face a significant inheritance tax bill that may prevent them from passing on their farm, as they inherited it, to their children? If the Minister is anxious about the scheme being used for tax avoidance, will he reconsider the NFU’s suggestion that there be a clawback mechanism, which would allow the Government to take back the exemption if a farm was sold within a certain period after inheritance?

[Dan Tomlinson]

No, we will not be considering the clawback proposals put forward. Instead, the Government have come forward with the change that was announced in December, which increases the threshold from £1 million to £2.5 million. It is worth remembering that the tax rate paid above the higher threshold is half the rate that anyone else who has sufficient assets would pay if they were liable for inheritance tax, and that any tax liability can be paid interest-free over 10 years. On balance, while these changes will affect some of the very largest estates—the Government have published the numbers, which are based on the actual claims data from His Majesty’s Revenue and Customs; it estimates that fewer than 200 estates will pay additional tax—almost all the estates paying additional tax will pay significantly less than they would otherwise have done, because we have listened to family businesses and farming communities.

[Mr Clive Betts (Sheffield South East) (Lab)]

Although this issue is clearly of importance to the farming industry, it is also of importance to small firms in the steel and engineering sector in my constituency. The owner of Special Quality Alloys, Benn Beardshaw, wrote to tell me that the firm had been in the family for many years, and had been passed on from one generation to another. He was really concerned that the measure as initially proposed could lead to a break-up of that important firm, which has won the Queen’s award for enterprise, or to it being sold off. Will the Minister confirm that this measure will equally help those sorts of small businesses, which are vital to the overall wellbeing of the steel and engineering sector in Sheffield?

--- Later in debate ---

[Dan Tomlinson]

I thank my hon. Friend for his question, which has given me a chance to return to a question that the shadow Secretary of State, the hon. Member for Epping Forest (Dr Hudson), asked, but that I did not quite get to—he will have to forgive me. I will put on record for the House that the number of estates claiming only business property relief is set to fall from 325 to 220 a year as a result of our increasing the threshold from £1 million to £2.5 million.

I have met representatives of Family Business UK. I know that, as well as having private conversations about APR, Labour Members have been discussing the BPR proposals with the Government. The uplift in the threshold will mean that family businesses that people wish to pass on will now be subject to a lower tax rate, or will not have to pay the tax at all in many cases.

[Wendy Chamberlain (North East Fife) (LD)]

I find it interesting that the Minister says that this is the right policy. That is what the Government said on 23 December, but not what they said at oral questions on 18 December—the day before we rose for recess. I have spoken to farmers who will now not be affected by the tax, but who have spent cashflow and hard-earned savings on financial advice to ameliorate their position. Things are not getting easier for farmers; just this morning, one of my local farmers got in touch to say that he was informed on new year’s day that his milk supply faces a 3p per litre cut. What is the Government’s assessment, alongside what is in the Batters report, of the ongoing financial impact on farmers, be it of poor Government policy or of poor supply chain practices?

[Dan Tomlinson]

Earlier in the year, Members asked us about making these changes, and we have come forward with a revised proposal that includes a higher threshold. That is the right thing to do; it shows that we have listened to representations from the farming and business communities, as my hon. Friend the Member for Sheffield South East (Mr Betts) mentioned. The Batters report, which was published on 18 December, made a number of recommendations. We will take forward many of those proposals to ensure that we support increased profitability for farmers and continue to work on important sustainability initiatives.

[John Whitby (Derbyshire Dales) (Lab)]

I was grateful for the opportunity to meet the Chancellor recently to highlight the impact that the changes to APR and BPR would have had on farmers in Derbyshire Dales. I therefore sincerely thank the Minister and the Chancellor for listening to me and other members of the Labour rural research group, and raising the tax-free allowance. Since the change was announced, more than 100 farmers have written to me to say how pleased they are about it. One farmer said:

“This has been hanging over me all year, making me ill, and I can’t believe the relief I’m feeling right now.”

Will the Minister or the Chancellor take the opportunity to visit a farm in Derbyshire Dales to see for themselves the positive difference that this change has made?

[Dan Tomlinson]

I thank my hon. Friend for his invitation. I will pass it on to the Chancellor of the Exchequer, and will carefully consider it myself.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

The Minister referred to the importance of manifesto commitments. Where in the Labour manifesto did it say that there would be any tax restrictions on inheritance for farmers? In fact, when they were in opposition, did Ministers not go around promising not to impose such a tax? They then did precisely the opposite. When he talks about manifesto commitments, will he have a slightly less selective memory and avoid misconstruing the position of the NFU, which is still in favour of the abolition of the tax altogether? Tom Bradshaw is my constituent. I hope that the Minister will send him his best wishes and congratulate him on exposing the Government’s hypocrisy.

[Dan Tomlinson]

I had the pleasure of meeting Mr Bradshaw last year. The NFU published statements—both at the time of the announcement and around the turn of the year—welcoming the changes that the Government have proposed. The hon. Gentleman asks about manifesto commitments. We were very clear in our manifesto that we would return economic stability to this country, putting behind us the chaos of Liz Truss and the chaos that the Conservatives left us with. Part of that is about ensuring that we do not continue to borrow at excessive levels, as they did, but bring borrowing down—[Interruption.] Borrowing is coming down in every single year of the next five years. We are ensuring that we can raise, in a fair and sustainable way, the revenue to fund our public services.

[Laura Kyrke-Smith (Aylesbury) (Lab)]

I hugely welcome these changes, which have been met with real relief by the farmers in my constituency, and I am grateful to the farmers who fed in their perspectives to me over the last year and allowed me to pass them on to the Treasury. Can the Minister reassure me and my local farmers that he will continue to listen and engage with our farming communities in this way, recognising the inherent value of farming, but also the great contribution it makes to the economy and our food security?

[Dan Tomlinson]

I thank my hon. Friend for the conversations that I know she has had with Ministers on this and other issues in recent weeks and months. Yes, we will continue to do all we can to support farmers and the farming industry in this country. That is part of why we are working hard on trade deals, to make sure we can improve access to markets for farmers here in the UK so they can export more of their produce overseas.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

I pay tribute to the Minister: he is back out again doing a sterling job of being a totally discredited Chancellor’s human shield. He will remember the Finance Bill that we debated just before Christmas, which took three hours in this place, and two hours of that was taken up with agricultural property relief, as I pointed out to him at the time. He wants us to believe that he has moved this policy into an acceptable position, but it is no such thing: this is a policy that Labour expressly said they would not enact, and then they did it, and now they have made it slightly less bad. I and the NFU Scotland are firmly opposed to this in its entirety, so will he take a win for a hard-up Government and pause this policy pending a proper analysis?

--- Later in debate ---

[Dan Tomlinson]

Yes, we did discuss this at Treasury questions and on Second Reading of the Finance Bill, and we will have time to discuss it in the Committee of the whole House next week too—and I can see from the number of Members wishing to speak now that there are many more questions coming so we may have many more hours today, Mr Speaker, to discuss it as well. In the end, the position that the Government have now reached is that we are going to amend the Finance Bill to make this change and increase the threshold from £1 million to £2.5 million. That will, we expect—and it will be confirmed by the Office for Budget Responsibility in the usual way at fiscal events—raise £300 million, money that we can put into our public services, rather than continue the chaos of previous years with additional borrowing. It is right to look in the round at fair and necessary tax changes that we can make on those with the broadest shoulders, so that we can fund our public services adequately.

[Ms Julie Minns (Carlisle) (Lab)]

Happy new year, Mr Speaker. I pay tribute to Carlisle NFU and my constituents who have raised this issue with me over the last 14 months, and I thank the Minister and his colleagues for engaging constructively and listening to those representations. North Cumbrian farmers face land price increases as a result of forestry firms snapping up large parcels of land and large landowners seeking to abuse the IHT system by hiding their wealth, and this is an important step in balancing the need to tackle that abuse and rising land prices and the need to raise the revenue required for our village schools, local health services and to tackle crime. Does the Minister agree that this now achieves that balance?

[Dan Tomlinson]

I thank my hon. Friend for her question and for her strong representation of rural constituents and rural communities. She makes a very important point. It is worth noting that this is a tax relief, and the tax relief as it stood before the changes that the Government have come forward with since the 2024 Budget meant that the top 7% of claims for agricultural property relief accounted for 40% of the Exchequer cost of the relief. That meant £219 million in foregone tax revenue—revenue that, by and large, this Government will now be raising from the very largest estates to help fund our public services in a sustainable way. The Opposition were never able to do that because of their chaotic management of the economy and the public finances.

[Aphra Brandreth (Chester South and Eddisbury) (Con)]

The Government have heard from these Benches time and again about the impact the family farm tax has had on food security and the risk to countryside stewardship and our environment and the economic viability of farms, but also, crucially, about the impact on farmers’ mental health. My question to the Minister is simple: on behalf of farmers across Chester South and Eddisbury, why did this decision take so long?

[Dan Tomlinson]

The Government wanted to ensure that the changes that we are legislating for in the Finance Bill in the coming weeks came forward before that Bill was passed. We have continued to listen to farming communities and family businesses. The changes with which we have come forward, including increasing the threshold from £1 million to £2.5 million, coupled with the changes announced in last year’s Budget, will mean that a couple can pass on up to £5 million of agricultural or business assets tax free, which we think is a fair and proportionate way to raise revenue from some of the largest estates in the country.

[Ben Goldsborough (South Norfolk) (Lab)]

South Norfolk is home to 400 farms, and I put on record my thanks to Will, Nick, David and Deborah, who are some of the farmers have supported me hand in glove over the past 14 months in making representations to the Minister. I welcome these changes, but the biggest threat to family farming in South Norfolk right now is biosecurity risk. I urge the Treasury to pay special attention to avian influenza and African swine fever, so that we can protect those family farms going forward.

[Dan Tomlinson]

I thank my hon. Friend for the strong representation that he has provided for his constituents since he was elected in 2024, and for raising an important issue. I am sure that DEFRA Ministers are alive to that issue and will continue to have conversations with hon. Members.

[David Davis (Goole and Pocklington) (Con)]

I refuse to call this property relief on what is an absolutely new tax, but will the Minister tell us if the agricultural property tax threshold will rise in line with agricultural land prices?

[Dan Tomlinson]

The Government have set the thresholds for tax policies over the period of the OBR’s forecast, and it would not be right for me to comment on the changes that may or may not happen after that. May I say to the right hon. Gentleman that throughout the time that Margaret Thatcher was in power, we did not have a system like the current system, so he is not quite right to say that this relief has always been there? It was not there when the political hero of many Conservative Members was in power.

[Andrew Pakes (Peterborough) (Lab)]

Happy new year to you, Mr Speaker, and to all your team. I welcome the Minister’s comments. I thank DEFRA and Treasury Ministers for engaging with farmers and National Farmers Union members in my constituency, and for listening to their views. Farming has had a terrible decade—much longer than 14 months—with rural services cut, farming budgets unspent, failed Brexit plans and trade deals that sold out British farmers. Does the Minister agree with me that with the changes that we have made to APR, the findings of the Batters review and the funding that this Government are putting in place, we can now turn a corner on that terrible decade for British farming?

[Dan Tomlinson]

Yes, I agree with my hon. Friend’s powerful contribution. He made important points about how the trade deals negotiated by the previous Government undermined British farming and that there was no consistency of investment and support for farmers up and down the country. What do rural communities think about that? At the last general election, they turfed out hundreds of Conservative rural MPs and elected over 150 Labour MPs to represent rural and semi-rural constituencies. Labour Members are now the mainstream voice of rural communities up and down the country.

[Helen Morgan (North Shropshire) (LD)]

The psychological impact of the past 14 months has been profound in rural places like North Shropshire. At every primary school visit that I have made in the past 14 months, I have been asked by children as young as seven or eight to confirm that I oppose the family farm tax, because it is having a devastating impact on their families at home. The uncertainty has also had a devastating impact on related businesses, such as agricultural machinery suppliers. It will continue to have an impact by making business owners deliberately keep their businesses small so that they do not have to pay inheritance tax, because they cannot sell off part of their farms as they will no longer be viable. Why are the Government continuing with this daft policy of restricting growth in rural areas?

[Dan Tomlinson]

The Government want to support growth and investment in rural communities. That is why we are putting in £11.8 billion of support over the course of this Parliament and ensuring that we improve our economy and our economic fortunes across the board as a country after the chaos of the last 14 years. We have had six interest rate cuts in a row, borrowing costs are coming down, and inflation is falling faster than people forecast—it is now forecast to continue to fall. All those long-term changes to improve our economic outlook will support businesses in rural communities and communities across the country.

[Joe Morris (Hexham) (Lab)]

May I put on record my thanks to farmers such as Nick, Matt, Debbie, James and Graham in the Northumberland branch of the NFU in my constituency? I was in contact with them regularly, and they welcomed the Minister to my constituency to hear at first hand about the potential impact of the policy had it not been changed. I urge him to impress on colleagues the importance of buying British wherever possible. The best way to improve farming profitability is to ensure that much of the public sector food procurement is done with British farms and to ensure that farmland is not lost. To replace potential food-producing land, more food-producing land does not need to be cut out of forests elsewhere in the world.

[Dan Tomlinson]

I thank my hon. Friend for inviting me to his constituency last year; I believe it was shortly after I was made a Minister on 1 September. It was a very productive and useful visit, and I thank the farmers and members of the community I met when I went to a lovely café and had some lovely tea and cake with my hon. Friend and those farmers. It was a really helpful conversation for me, and I am thankful to him for his representations on behalf of his constituents over many months. I want to work with him on procurement and ensuring that we can continue to support farmers and farming communities; I know that Ministers across Government, particularly in DEFRA, will continue to do that in the months and years ahead so that we can turn the page on the chaos we had under the previous Government.

[Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)]

I cannot adequately put into words the fear, concern and stress that farmers in my constituency and right across the country have felt as a result of the policy announced at the Government’s first Budget. That same fear is now being felt in rural pubs up and down the country due to the changes to business rates. Will the Minister apologise to those farmers for the fear, stress and cost that he has put them all through? Will he indicate to many publicans across Staffordshire that the Government are going to U-turn on business rates so that they do not close rural pubs?

[Dan Tomlinson]

The Government have been listening to rural communities, farming representatives and the representatives of family businesses. That is why, after listening, we have come forward with these changes, which we think strike the right balance between the necessary impulse to ensure a fair and sustainable tax system and continuing to protect smaller businesses and farms. I am sure that we will have many more chances in this place to continue to discuss business rates.

[Terry Jermy (South West Norfolk) (Lab)]

This is very welcome news, and many farmers in my constituency will be delighted. May I acknowledge the Minister’s engagement on this subject and the many conversations he has had with myself and other Labour party representatives from rural communities? I pay tribute to my hon. Friend the Member for Suffolk Coastal (Jenny Riddell-Carpenter) for her role as the chair of the Labour Rural Research Group and her advocacy for hundreds of farmers across the country. It is fair to say that the changes to APR are part of a long list of concerns for farmers in this country—concerns that were increased over 14 years of Conservative Government, when we saw a huge decline in farming. May I invite the Minister to join me in a new year’s resolution to work with Treasury colleagues to do more and to do all that we can possibly do to support farming in this country?

[Dan Tomlinson]

I thank my hon. Friend for his reminder that the previous Government and previous Conservative Prime Ministers were roundly rejected by the country at the last general election. People in rural communities and communities up and down the country voted for change for the better with this Labour Government and for a Government who will continue to represent and support farming communities up and down the country. Let me praise my hon. Friend on his recent appointment to the Environment, Food and Rural Affairs Committee, to which I know he will provide an invaluable contribution in his continued representation of rural communities.

[Sammy Wilson (East Antrim) (DUP)]

I wish you and the staff of the House a happy new year, Mr Speaker.

Regardless of the reason for the change in policy—whether it is simply fear of the electoral consequences of breaking election and manifesto promises to farmers, or a belated recognition of the importance of the farming industry to feeding the nation in an increasingly unstable world—I welcome these changes. However, I would point out to the Minister that despite his assurances, 25% of farmers in Northern Ireland will still fall over the threshold he has announced, which will have an impact on family farms because of the cost of land and so on. Having seen the disaster of the policy, does he accept that the only answer is to abolish it altogether?

[Dan Tomlinson]

No, I do not accept that. That is not the answer.

[Noah Law (St Austell and Newquay) (Lab)]

I thank the Minister for his considered engagement with rural Labour MPs such as myself on this issue from the get-go. I also thank farmers—at least in my part of Cornwall—for their dignified engagement at what I know has been a difficult time. Does the Minister agree that where we have landed now strikes a much better balance, one that in relative terms favours small family farms compared with industrial concerns, institutional investors and those looking to use agricultural property as a means of avoiding tax?

[Dan Tomlinson]

I thank my hon. Friend for his continued engagement on this and a whole range of issues that affect rural communities in Cornwall—he is a strong advocate for his constituents. As he says, we have now come forward with a change in the APR and BPR thresholds to make sure we can protect those smaller family farms.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I urge colleagues to keep their questions short, and for the answers to be on point.

[Alicia Kearns (Rutland and Stamford) (Con)]

This U-turn comes too late for too many. It is extraordinary to hear Labour MPs saying that their farmers are delighted; mine are sick with relief after 14 months. At the Liaison Committee, the Prime Minister accepted that he knew that some farmers had planned to take their lives or had already done so, yet it still took him well over a week to decide that rural lives matter. What was it that suddenly changed after 14 months for him to decide that our farmers should be stood by, and should not be questioning whether or not they were going to be here for next Christmas?

[Dan Tomlinson]

Over the course of recent months—since I have been in the Government, from September onwards—Ministers from the Department for Environment, Food and Rural Affairs and from the Treasury have continued to engage with farming communities and with business communities. As has been raised by some Members today, it is worth remembering that this change affects business property relief, not just agricultural property relief. As a result of that listening and engagement, we have come forward with this change in time for it to be included in the Finance (No. 2) Bill.

[Steve Witherden (Montgomeryshire and Glyndŵr) (Lab)]

This month marks 12 months since I first called on the Government to raise the APR threshold. I strongly welcome their decision to do so, and thank NFU Cymru and the Farmers’ Union of Wales for their tireless campaigning. Can the Minister assure me that the Government will continue to listen to rural communities like mine?

[Dan Tomlinson]

Yes, I can reassure my hon. Friend that we will continue to listen to, and engage with, the over 150 Labour MPs who represent rural and semi-rural constituencies.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

It really should not have taken over a year for the pleas of thousands of farmers to be heard, and for the Government to finally concede their mistake and change the disastrous family farm tax. However, it is clear that they still simply do not understand the industry. Many farms in Glastonbury and Somerton are run by multi-generational family partnerships, rather than married couples. Those businesses will not benefit from the combined spousal allowance of up to £5 million, so will the Chancellor finally give up and completely leave farmers alone to get on with what they do best: producing food for the nation?

[Dan Tomlinson]

We think that continuing to raise around £300 million from this policy is the right thing to do, so that—alongside the other changes that the Government are making—we can raise revenue in a fair and sustainable way to fund our public services.

[James Naish (Rushcliffe) (Lab)]

I refer the House to my entry in the Register of Members’ Financial Interests. I thank the Minister for his engagement on this issue over recent months—it has made a real difference. Given his engagement on this matter and rural issues, does he agree that this country needs a rural strategy, which this Government should be delivering?

[Dan Tomlinson]

This Government have our farming road map. We have also published the Batters review, and we will be taking forward many of the proposals and the recommendations in it, so that we can continue to support profitability and sustainability for farmers and our farming communities.

[John Cooper (Dumfries and Galloway) (Con)]

A guid new year to you, Madam Deputy Speaker, and the staff of the House.

The past 14 months have been hell for the farmers of Dumfries and Galloway, and the Minister has made it clear that he will not apologise for that. Will he stop fantasising, like the wealthfinder general, about the money he can take out of agriculture and instead concentrate on helping British farmers to put British food on British tables?

[Dan Tomlinson]

We need to continue to do all we can to support British farming so that we can have more British produce on our shelves and so that countries overseas can have more British produce, too. That is why we have been working hard on our trade deals to secure more access for British farmers to markets overseas.

[Perran Moon (Camborne and Redruth) (Lab)]

I thoroughly welcome the increase in the threshold, and I remind the Minister that in terms of farming profitability, my Conservative predecessor—a former DEFRA Secretary —described their Australia deal as

“not actually a very good deal for the UK”.—[Official Report, 14 November 2022; Vol. 722, c. 424.]



The Conservatives sold out and undercut our farmers with trade deals to New Zealand, whereby we could not export to New Zealand, but it could export to us. These deals were cheered on by Reform. Will the Minister confirm that this Labour Government will never sign such incompetent and damaging deals, and that we will not take lectures on farming profitability from the Conservatives or Reform?

--- Later in debate ---

[Dan Tomlinson]

My hon. Friend gives me the chance to quote Michael Gove, who admitted that the previous Government had let down British farmers. He said:

“I can confirm I think we negotiated poorly with Australia, and New Zealand, but particularly with Australia in defence of our farmers”.

He admits that the last Government made mistakes, failing farmers on trade; I wonder whether the Opposition will do so too.

[Richard Tice (Boston and Skegness) (Reform)]

This partial U-turn on the dreadful family farm tax is partially welcomed by farmers in Boston and Skegness, but where is the Chancellor to come and admit the error of her ways? Jobs have been lost, investment has been slashed and, tragically, lives have been lost by this grief tax. Will the Minister, at the third time of asking, apologise to the farming community?

[Dan Tomlinson]

As the Minister with responsibility for tax, I am here answering questions about tax, and I am happy to continue to do so. The change that the Government came forward with last month—we will be legislating for it in the Finance Bill—will increase the threshold from £1 million to £2.5 million. We are doing that because we have listened to farmers and their representatives and to family businesses, too. We think that is the right thing to do, and we think it strikes the right balance.

[Dame Nia Griffith (Llanelli) (Lab)]

I thank my hon. Friends in DEFRA and the Treasury for listening to farming colleagues, including NFU Cymru and the Farmers Union of Wales, in making this welcome change to the proposals for agricultural property relief. It will mean that many more Welsh farms will not pay any additional inheritance tax. The Minister will know that the previous Conservative Government signed very detrimental trade agreements with Australia and New Zealand, which within 10 years will lead to limitless meat imports. Will he look carefully at what can be done now to help those Welsh family farms to maintain their farming tradition? At the moment, they will be open to severe competition, and we need to look at everything that can be done to help them.

[Dan Tomlinson]

The previous Government negotiated poorly when it came to trade deals. When the Conservatives negotiate, Britain loses. Labour has negotiated four new significant trade deals that will help to ensure that British businesses—farming businesses and businesses of all sorts—can access more markets, more easily. That is the right thing to do for long-term growth and productivity.

[John Glen (Salisbury) (Con)]

I welcome the partial U-turn. When I met a number of farmers on Boxing day, all 400 of them were very concerned that the next phase of this Government’s relationship with rural Britain would be a consultation on banning trail hunting. On the basis of this experience, I think that the Minister could go back to the Treasury and ask his officials to put together a team to work very closely with their counterparts in DEFRA to absolutely ensure that the farmers’ obligation, and indeed their true intent—to produce food and be good stewards of the environment— can be combined, and to ensure that never again in the course of this Parliament will such measures be undertaken as they were last year.

[Dan Tomlinson]

The right hon. Gentleman has mentioned the issue of trail hunting. That was in our manifesto, and it is part of our animal welfare strategy to continue with some important changes there. I think it right for governing parties to make progress on the commitments that they made when they stood before the country.

[Dave Robertson (Lichfield) (Lab)]

I welcome the Government’s changes in their plans in relation to inheritance tax on farmers and family businesses. The current system does not work. We need a tax regime that protects genuine family farms but does not let the super-rich dodge tax by buying up land, and many farmers in my constituency have the same concerns about that, but they have also made it very clear to me that the £1 million threshold was too low and would have a significant and detrimental impact on farming in my constituency. Along with many other Labour Members in rural seats, I have made that case to Ministers directly, and I am very pleased that the Govt are raising the threshold to £2.5 million, because that will make a huge difference for farmers in my constituency. I am very interested to hear, though, what steps the Government will be taking—and what steps the Minister can take, with colleagues—to ensure that profitability is at the forefront of our work with farmers, particularly on things like—

[Dave Robertson]

I will leave it there.

[Dan Tomlinson]

The Batters review focused closely on this, and we will be looking at its proposals and recommendations, and ensuring that we can do all that we can as a Government, within the constraints that we have, to continue to focus on improving farming profitability.

[Several hon. Members rose—]

[Anna Sabine (Frome and East Somerset) (LD)]

In my constituency, we have not just a lot of farmers but a huge number of other businesses and livelihoods that rely on those farmers, and the whole of that rural economy has been negatively impacted over the last 14 months. Will the Minister undertake not just to apologise to communities like mine, but to ensure that the Government will genuinely start listening to rural communities? At the moment, they do not feel listened to, understood by or even cared for by this Government.

[Dan Tomlinson]

We will continue to listen to rural communities, and to farming communities, to make sure that we can support them as they seek to grow and invest in their businesses in order to improve and support the communities that they are part of. It is because we have been listening to the representatives of farming communities and family businesses that we have come forward with the changes that we think strike the right balance.

[Steve Race (Exeter) (Lab)]

I welcome this sensible compromise, and thank the members of the NFU in Devon for their work and for talking to me, both here and in Exeter. The Government’s support for nature-friendly farming through environmental land management schemes is to increase from £800 million a year to £2 billion a year over the coming years. Can the Minister confirm that they are taking the necessary steps to ensure that we can, in a sustainable and environmentally-friendly way, produce the food that we need in this country?

[Dan Tomlinson]

I thank my hon. Friend for the engagement that we have had on this and other issues that affect his constituency, which I know contains some rural elements. He has raised an important point. We need to continue to work in partnership with farmers, and with their representatives and trade bodies, to make sure that we can support sustainable food production in the UK, and we are investing £11.8 billion of support over this Parliament.

[Stuart Anderson (South Shropshire) (Con)]

I thank all the South Shropshire farmers and businesses for their tireless campaign. They were continually told by the Government that they were wrong, but they have now been proved right. They are still telling me that this tax is wrong. The family farm tax is not right. Will the Minister apologise for the heartache, pain and suffering that he has caused South Shropshire farmers and businesses, and scrap the tax completely?

[Dan Tomlinson]

We will not be scrapping this tax completely. We have tabled an amendment that the House will have the chance to debate next week in Committee of the whole House on the Finance Bill. We think that the proposals that we plan to implement will raise £300 million in a fair way and protect smaller family farms.

[Douglas McAllister (West Dunbartonshire) (Lab)]

Last month, I visited Portnellan farm in my West Dunbartonshire constituency. I received a very warm and courteous welcome from husband and wife farmers David and Freda and their son Chris. The Scott-Parks run their family farm and were keen for me to hear and see at first hand the challenges that they face in ensuring that the next generation can continue to farm at Portnellan. I listened to their request that we review the original proposals. Does the Minister agree that 85% of all farming estates will now be protected from inheritance tax but, importantly, that we will maintain the original principle that tax avoiders should not use land to avoid tax at the expense of hard-working family farmers such as the Scott-Parks?

[Dan Tomlinson]

My hon. Friend makes an important point. If someone has agricultural or business assets worth £2.5 million, for example, they will now pay £300,000 less in inheritance tax than they would otherwise have paid; if they are worth £5 million, they will pay £600,000 less than they would have paid before the changes that we announced last month. The challenge of the proposals from the Opposition parties is that they would provide a £1 million tax cut to an estate worth £10 million. Their priority is clearly giving the very largest estates in this country tax cuts worth millions or even tens of millions, rather than using revenue in a fair way to fund our public services.

[Dr Ellie Chowns (North Herefordshire) (Green)]

Farmers in North Herefordshire welcome this change, as do I, but there are still huge problems with the policy: it does not even fix the tax loophole for people who buy up land to avoid tax, and it has created huge economic damage and heartache in farming communities. First, why did it take more than a year to listen to farmers’ voices? Secondly, will the Treasury please engage brain before announcing policy in future, and listen to and work with farming communities?

[Dan Tomlinson]

We will, of course, continue to engage with, listen to and work with farming communities on the policies that we are putting forward. It is interesting to see and hear that there is at least one wealth tax that the Green party does not support.

[Sean Woodcock (Banbury) (Lab)]

I thank farmers in my constituency of Banbury and Chipping Norton for engaging constructively with me on the issue—well, the vast majority of them, anyway. I know that they will welcome these changes, as they will welcome the record £1.8 billion investment in sustainable farming and food production provided by this Government. However, they are concerned about trade deals, having been left high and dry by the previous Government, so will the Minister confirm that this Government will protect farmers, not sell them down the river as happened previously?

[Dan Tomlinson]

Having grown up in rural west Oxfordshire, I know the importance of farming and rural communities in the fantastic county of Oxfordshire, which thankfully now does not have a single Conservative MP—long may that continue. It is a very good thing that we have strong Labour representatives in north Oxfordshire who are continuing to fight the good fight for their communities.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

This partial U-turn on the family farm tax is undoubtedly welcome, but does the Minister understand the hell that he has put farmers through during the past 14 months, not just in my constituency but across the United Kingdom? He should do the right thing and scrap this dreadful, dreadful tax.

[Dan Tomlinson]

We will not be going ahead with the hon. Member’s proposal of scrapping this change entirely.

[Chris Vince (Harlow) (Lab/Co-op)]

I put on the record my thanks to the farmers in my constituency of Harlow who have engaged really productively on the issue. In particular, I pay tribute to Richard and Jack Scantlebury of Great Canfield. Can the Minister talk further about how the record investment of £11.8 billion in sustainable farming can help to benefit farmers such as Jack and Richard in my constituency?

[Dan Tomlinson]

My hon. Friend is right that we are putting that amount in over the course of this Parliament to support innovation, agritech and all the things that farming businesses can and should do to invest and grow and to support their communities. That is the right thing to do, and it is turning the page on the chaos and the underfunding of previous years.

[Richard Foord (Honiton and Sidmouth) (LD)]

The Minister said that this reversal of plans to introduce inheritance tax on many farming families has happened

“after listening carefully to feedback from the farming community”.

This news just before Christmas was indeed a massive relief, but given that the farming community did not say anything in December that it had not been saying for the previous 13 months, will the Government listen properly in future?

[Dan Tomlinson]

Yes, the Government will make sure that we do continue to listen.

[Chris Hinchliff (North East Hertfordshire) (Lab)]

I thank the Minister for listening and acting on the concerns that I and many other Labour MPs raised alongside our farming constituents. Now that a happier compromise has been found on inheritance tax, the issue remains one of securing a profitable future for nature-friendly farming in our country. Can the Minister provide an update on what actions the Treasury is taking to support the swift roll-out of our manifesto commitment for 50% of the food bought by the public sector to be locally produced?

[Dan Tomlinson]

I cannot update my hon. Friend at this moment, but I would be happy to write to him on that point.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

The Government say they have been listening carefully, but they had 14 months and four votes to listen to the Opposition and the farming community. One question is: what changed the Government’s mind? The second question is: who made the decision—the Environment, Food and Rural Affairs Secretary, the Prime Minister or the Chancellor—and how long did they take to persuade the others to make that right decision?

[Dan Tomlinson]

Government decisions are made collectively. Yes, the Government have listened to farming communities and farming businesses, and to representatives of family businesses that would also have been affected by the £1 million BPR threshold, which was the same as the APR threshold.

[Jonathan Davies (Mid Derbyshire) (Lab)]

It was very welcome news that the Government had revisited the issues of business property relief, which will help family businesses in my constituency, and agricultural property relief, which means that up to £5 million can be passed on by a qualifying couple. It was also right that the Government considered this area as a whole, because too many people, including famous folk off the telly, had bought such properties with a view to insulating themselves against tax. Can the Minister assure me that we will take steps to support our farming community by not selling them down the river with dodgy trade deals, as we saw with Australia and New Zealand under the previous Government, and that we will work closely with our European export partners? Will he also ensure that the SFI and other subsidies get to where they need and are spent in a timely way, because they went unspent under the previous Government?

[Dan Tomlinson]

My hon. Friend is right to mention the disastrous trade deals that happened under the previous Government, and I thank him for giving me the chance to mention the trade deals that we have implemented, which seek to support businesses across the country to access more markets. I hope that, with our continued engagement with the European Union, we can continue to do that closer to home, too.

[Ben Lake (Ceredigion Preseli) (PC)]

Does the Treasury subscribe to the general commitment that the Government have made to ensure that all policymaking considers the impact of decisions on rural areas? If it does subscribe to that rural-proofing commitment, will the Minister elaborate on how he will ensure that it is abided by in future so that rural communities, such as those in Ceredigion Preseli, are not subjected to yet another ordeal such as we have just endured?

[Dan Tomlinson]

I can reassure the hon. Member that I and Ministers will continue to think through the impacts on rural communities—and all communities—when we come forward with changes to tax or other policies. It is because we have done that that we came forward with the change we announced just before Christmas, and we will be making that change in the Finance Bill in the coming weeks.

[Katie Lam (Weald of Kent) (Con)]

Family farms and family businesses across the Weald of Kent have been through appalling emotional turmoil in trying to work out how to avoid leaving their children unaffordable, crippling tax bills when they die. They are operating on razor-thin margins and small profits, and many of them have been forced to shell out thousands of pounds on professional services advice on this issue, which is now worthless. What does the Minister have to say to them?

[Dan Tomlinson]

To those families—people with farms and businesses that would have been affected by the lower threshold, but will now be affected less or not at all by the higher threshold—I would say that we have listened. Over recent months, we have heard the concerns that were raised, and that is why we have raised the threshold from £1 million to £2.5 million. That means a couple can pass on up to £5 million of agricultural and business assets tax-free on inheritance. I briefly remind the House that, above that threshold, the tax rate is half the rate that everyone else pays—20% rather than 40%—and that those who pay it will, if they so need, have 10 years to pay it interest-free.

[Cameron Thomas (Tewkesbury) (LD)]

Farmers are among the most robust members of society, yet since autumn 2024 several have spoken candidly with me about the mental health impact of the family farm tax, in an industry that suffers a rate of suicide four times the national average. The changes to the Government’s family farm tax are welcome, but will the Government take this opportunity to apologise to Gloucestershire farmers for 14 months of torment?

[Dan Tomlinson]

We have listened. We have made sure, after the engagement we have had with farmers across the country, their representatives and the representatives of family businesses, that we have come forward with a policy proposal that we, on the Government Benches, now think is balanced. It raises £300 million from the very largest estates and does so in a fair way that means we can continue to fund our public services sustainably.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

Fourteen months is a long time for farmers to have the sword of Damocles over their heads. Many still do, because this is only a partial U-turn in the policy. The Minister has said many, many times today that he is and has been listening to farmers, but will it take another 14 months before he hears them and scraps this policy altogether?

[Dan Tomlinson]

We heard what farmers were saying and that is why we have come forward with the changes we announced last month.

[Robin Swann (South Antrim) (UUP)]

The Ulster Farmers’ Union and the Young Farmers’ Clubs of Ulster made many representations here with regard to the damage that this policy would do to Northern Ireland farms, but there is one specific point I want to ask the Minister about. He has mentioned a number of times the allowance being passed between couples and civil partnerships. Example 2, in his own Government paper, states:

“Two people (such as siblings) who jointly own a farm will be able to pass on a farm up to £5.65 million”

under the allowance. If there is a father and daughter, uncle, aunt, niece and nephew in that partnership, can they pass on that allowance, too—seeing as he is the tax Minister?

[Dan Tomlinson]

They can each pass it on up to £2.5 million to whomever they choose to pass it on to. In the inheritance tax system more broadly, it is the case that the various bands and allowances are only fully transferable between spouses, and this is consistent with that policy. But it would be the case that if a farm was owned, say, by a brother and a sister, the brother could pass up to £2.5 million to whomever he wished and the sister could pass up to £2.5 million to whomever she wished. That is what example 2, which the hon. Gentleman is referring to, gets at.

[Dame Harriett Baldwin (West Worcestershire) (Con)]

Worcestershire’s farmers have had to endure 14 months of sleepless nights over this policy before this partial U-turn. The Minister has hinted, at the Dispatch Box today, that he appreciates he will also have to U-turn on business property rates, because of the transitional relief coming off too quickly. Can he commit to the House that he will do that U-turn in less than 14 months?

[Dan Tomlinson]

We are having a discussion today about agricultural property relief and business property relief. I am sure we will have many occasions in the coming weeks and months to continue to discuss the changes that the Government have made on business rates to support businesses through the transition, because of course there has been a significant increase in their rateable values, coming out of the pandemic. I would just say to Opposition Members that the changes to the rateable values and the valuation methodology were signed off by Conservative Ministers. We have made sure that we are providing support, for example business rates will be capped at 15% for many pubs this year.

[Lisa Smart (Hazel Grove) (LD)]

It is wholly unacceptable that farming families in places such as Mellor and High Lane have had over a year of uncertainty and anguish since the Government first announced these tax hikes. The Government got it wrong and the changes we are talking about today are welcome, but will the Minister commit to consulting farming communities before making any future changes to taxes affecting farming communities? That was the step in the process that was missed and it could have saved them 14 months of anguish, had they got it right last time.

[Dan Tomlinson]

Because I sign them off, I can tell the hon. Lady that there are many consultations on tax changes that we publish alongside fiscal events. If she wished to engage with the consultation on electric vehicle taxation, she could do so; if she wished to engage with the consultation on the high-value council tax surcharge that will be published shortly, she could do so too. The Government have published many consultations on tax changes, and on those where formal consultations are not published—it is not universal—we continue to engage in detail with those who are affected, as we have done with this change.

[Wendy Morton (Aldridge-Brownhills) (Con)]

Despite many opportunities to do so, the Minister simply refuses to apologise. Despite warnings from so many organisations that this tax would do real harm, farmers, including those in my constituency, have been forced to live with fear and uncertainty for more than 14 months. Can the Minister explain what support his Department will give to the families who have shelled out money for advice and whose businesses have suffered irrevocable damage as a result of this Government?

[Dan Tomlinson]

I have been asked that question already by an Opposition Member, but I am happy to give the right hon. Lady a similar answer. I can say to those families that we listened carefully to the representations that were made about the level of the threshold as it was originally set at the Budget in 2024, and we have now come forward with a change to increase the threshold from £1 million to £2.5 million, which, coupled with the changes announced at the Budget in 2025, will now be transferable between spouses, allowing those families to pass on up to £5 million tax free.

[Caroline Voaden (South Devon) (LD)]

Happy new year, Madam Deputy Speaker. For 14 months, I have stood here alongside my colleagues and asked various Ministers to reconsider this policy. For 14 months, farming organisations up and down the country have campaigned relentlessly against the policy. Why did it take the Government so long to listen to them? Would it not be nice if someone was able to stand at the Dispatch Box and simply say, “We’re sorry—we got this wrong. We commit now to consult with farming and rural communities on any further changes to tax reliefs affecting them”?

[Dan Tomlinson]

We have come forward with a change to this policy after listening to farmers and farming communities and to the representations that have been made. We think that this is the right change. We will have the chance to debate it again when we consider the Finance (No. 2) Bill in Committee of the whole House next week, when the amendment that has been tabled will be voted on. In the end, Opposition Members who wish for the Government not to go ahead with this change at all should come forward with ideas for how they would raise £300 million from those who have the very largest estates in this country. We think it is right to raise revenue from those with the very broadest shoulders, and that is what this change will allow us to do.

[Bradley Thomas (Bromsgrove) (Con)]

After months of sleepless nights, fear and uncertainty, this partial U-turn is a victory for farmers—I pay tribute to farmers across the country, but particularly those in my constituency of Bromsgrove and the villages. Despite the U-turn, this policy should still be scrapped. What can the Minister say to farmers regarding incentives? Where is the incentive for a farm to invest in very expensive capital equipment if it may tip them over the threshold of liability for the family farm tax?

[Dan Tomlinson]

Just to be clear, this policy applies only to the farming or business estates worth more than £2.5 million, or £5 million if owned by a couple. There are still significant incentives to grow and invest in people’s businesses. This tax rate is half the rate for everyone else paying inheritance tax, if they have sufficient assets to get over the threshold. I think that is worth noting. Only around the very largest 10% of estates in the country pay any inheritance tax at all.

[Brian Mathew (Melksham and Devizes) (LD)]

On behalf of the family farmers of Melksham and Devizes, can I point out that farm prices differ across the UK and that raising the level of APR to a flat £6 million, say, whether a farm belongs to a couple or to an individual farmer, would be a great help in assuring the farmers about the future, freeing them from worry and ensuring their future growing our food?

[Dan Tomlinson]

We think it is right to have the same level across the country. It is the same in other parts of our tax system, and it would not be right to have different tax thresholds for different small parts of the country.

[Jim Allister (North Antrim) (TUV)]

I certainly welcome the increase in the threshold as far as it goes, and I commend the campaigning farmers who secured it. In explaining it today, the Minister said that the Government have “got the balance right”, but of course those are the very words that he used at the Dispatch Box and in Westminster Hall when defending the £1 million threshold, and each time he caused torment and anxiety to farming families. Is he sorry for the anxiety caused needlessly to those farmers?

[Dan Tomlinson]

The number of estates that will be affected by this change will fall by half as a result of the changes that the Government announced late last year after listening to representations from various business and farming communities. That means that rather than 375 estates being affected per year, it will now be closer to 185 estates affected per year. Around 85% of estates will not pay any additional inheritance tax, and the vast majority of those that do will pay significantly less than they would have done before the change we announced late last year.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

I welcome the revised threshold change; it is a first step in the right direction. I thank the local farming community in South Warwickshire and the National Farmer’s Union in Warwickshire for their tireless campaigning. However, farmers across my constituency tell me that the changes to agricultural property relief have created many months of uncertainty, freezing investment and growth and affecting succession planning. Why did the Chancellor and her team announce changes to the agricultural property relief last year without meaningful consultation with family farmers first?

[Dan Tomlinson]

I thank the hon. Member for welcoming the changes that the Government have brought forward. We did continue to engage with representatives from the farming community. I believe that the Prime Minister mentioned being in conversation with Mr Bradshaw from the NFU, and Ministers across Government have of course listened to and engaged with the farming community. I myself went up to Hexham. I see that my hon. Friend the Member for Hexham (Joe Morris) has left—for other important business, I am sure—but I met farmers in his constituency. All those different forms of engagement have proved very valuable indeed.

[Adrian Ramsay (Waveney Valley) (Green)]

Farmers in Waveney Valley are relieved at this change, but they are also frustrated that the Government have not been listening about the underlying causes of why it is so difficult for farmers to make even a living wage to put food on our table. It has been obvious from the outset that the Government needed to review the threshold, so it is baffling that it took 14 months for them to do so. Does the Minister recognise the emotional and financial cost of this 14-month delay?

[Dan Tomlinson]

I recognise that many estates that would have been affected by the lower threshold, rather than having to pay additional inheritance tax, will now not be paying any inheritance tax at all. We have moved hundreds of estates out of having to pay additional inheritance tax. We have also reduced the tax liabilities for those larger estates too, because we have listened.

[Ian Roome (North Devon) (LD)]

Many of my rural constituents are relieved that the Government have partly seen sense on this issue. Given the track record of U-turns from this Government, when I meet with a group of local farmers next week, what reassurance can I give them that the Government will not change course on this policy again in the near future?

[Dan Tomlinson]

The Finance (No. 2) Bill will be making its way through the House in the coming weeks, and once the Bill is law that change will come forward. If the hon. Gentleman meets his farmers on 7 April this year, the change will already be in place.

[Edward Morello (West Dorset) (LD)]

Happy new year, Madam Deputy Speaker. I pay tribute to the farmers of West Dorset who have never stopped campaigning against the family farm tax, and especially those hardy ones who have repeatedly driven their tractors up to London to let their views be known. This is just the latest in numerous assaults by the Government against our farming communities. So will the Minister take this opportunity to put on the record that the Government will not agree to President Trump’s demands that we accept more food imports at lower food standards as part of a US trade deal?

[Dan Tomlinson]

We will always fight for the interests of British businesses and British farmers in the deals we strike with countries across the world.

[Mr Lee Dillon (Newbury) (LD)]

Happy new year, Madam Deputy Speaker. In the last 14 months, constituents in Newbury, which I am proud to represent, have really felt the burden of the unfair family farm tax. I have hosted farmers here in Parliament and invited all parliamentarians to come and meet them, and I am proud that Members—predominantly from the Opposition Benches—have made that effort, and the Government have started to listen. But I have family farms in my constituency that will still have to pay £600,000, and they will have to sell off their farms to pay those tax bills. When the Government table their amendment, will they publish an assessment of those remaining farms and whether it is likely that they will need to be sold off to fit Labour’s tax bills?

[Dan Tomlinson]

The amendment, which has already been laid before the House, sets out the changes that the Government are making. In the letter that all hon. Members will have received, we set out our estimate that the number of estates we think will be affected will halve, and that about 85% of farming estates claiming APR—sometimes with BPR—will not pay any additional inheritance tax at all as a result of these changes.

[Claire Young (Thornbury and Yate) (LD)]

Looking at farm sizes and land values locally, I fear that family farms will still be paying the family farm tax. What evidence is there that £2.5 million realistically reflects the value of a typical family farm in a constituency with higher land values, such as Thornbury and Yate?

[Dan Tomlinson]

May I thank all hon. Members on both sides of the House for their engagement on this important issue today? We have set the threshold at £2.5 million for a single person and £5 million for a couple as a result of the changes announced at the Budget 2025. We think that threshold is right and fair. It means that the number of farming estates that will be affected will fall by half, and the vast majority will pay no additional inheritance tax at all.

[Dame Harriett Baldwin]

On a point of order, Madam Deputy Speaker. Earlier the Minister said that agricultural property relief was not available under Margaret Thatcher. In fact, it was Margaret Thatcher’s Government who brought it in under the Inheritance Tax Act 1984, and it was subsequently increased to 100% under John Major. How might I go about getting the Minister to correct the record?

Inheritance tax relief for infected blood compensation payments

Dan Tomlinson Excerpts

Thursday 18th December 2025 Written Statements

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

At Budget 2025, the Government announced that they would extend the existing relief from inheritance tax to compensation payments made from the infected blood compensation scheme and the infected blood interim compensation payment scheme. A tax information and impact note has been published and can be found here: 

https://www.gov.uk/government/publications/inheritance-tax-and-infected-blood-compensation-payments

Prior to these changes, infected blood compensation payments were already relieved from IHT on the death of the infected or affected person eligible for compensation. However, if the infected or affected person had died before the compensation payment was received, the IHT relief did not extend to the estate of whoever received the payment following their own death (the “first living recipient”).

The Finance Bill 2025-26 contains a power to make changes to the IHT treatment of infected blood compensation schemes in secondary legislation. The Government will lay regulations before Parliament, subject to parliamentary approval of the Bill, and this statement sets out what this means in practical terms, and what action impacted individuals should take ahead of regulations being made.

Changes for first living recipients

First living recipients will be able to pass on the value of infected blood compensation payments upon their death without attracting an IHT charge. This change will apply retrospectively.

Alternatively, first living recipients can pass on some, or all, of their compensation payment during their lifetime as a “qualifying gift”. When first living recipients make a qualifying gift, the compensation will be treated as never having formed part of their estate. As a result, qualifying gifts will not attract an IHT charge, and the IHT relief on death for the compensation transferred will also pass to the recipient of the qualifying gift.

If the compensation payment was made before 4 December 2025, the first living recipient will have two years from 4 December 2025 to make any qualifying gifts. If the compensation payment is made after 4 December 2025, the first living recipient will have two years from the date of payment to make any qualifying gifts.

Any such qualifying gifts must be recorded in writing and signed by the first living recipient, even if the gift has already been made.

Changes for infected and affected people

Any compensation in an infected or affected person’s estate on death will continue to be relieved from IHT. Lifetime transfers of compensation payments made by infected or affected people will not attract an IHT charge. This change will apply retrospectively to qualifying gifts of infected blood compensation payments that have already been made by an infected or affected person. Any such gifts must be recorded in writing and signed by the infected or affected person, even if the gift has already been made.

Collection and refunds of IHT on infected blood compensation payments

As of 26 November 2025, His Majesty’s Revenue and Customs will no longer collect IHT on infected blood compensation payments in the circumstances set out above.

HMRC will also refund any overpaid amounts of IHT made before these changes were announced. Personal representatives who have paid IHT on infected blood compensation payments can claim a refund by submitting a corrective account using form C4, which is available at: 

https://www.gov.uk/government/publications/inheritance-tax-corrective-account-c4

Customers who require assistance with this process can contact HMRC’s IHT helpline for support. Contact details are available at: 

https://www.gov.uk/find-hmrc-contacts/inheritance-tax-general-enquiries

[HCWS1209]

Finance (No. 2) Bill

Dan Tomlinson Excerpts

2nd reading
Tuesday 16th December 2025 Commons Chamber

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move, That the Bill be now read a Second time.

On 26 November, my right hon. Friend the Chancellor delivered her second Budget at this Dispatch Box. This was a Budget to build strong foundations and a secure future for our country, with no cuts to capital spending—which I am sure would have been implemented by the Conservatives, if they were in this financial situation—and no return to austerity, including for public services. This is a Budget about Labour choices.

[Graham Stuart (Beverley and Holderness) (Con)]

The Minister says that there will be no cut to capital budgets, but of course he is talking only about the public sector. Has he seen the CBI Economics research that suggests that there will be severe capital budget reductions in the private sector—the very sector that creates the wealth on which everything else depends?

[Dan Tomlinson]

I am sure that the right hon. Gentleman will have read the Office for Budget Responsibility’s report—we had a bit of extra time to read it this year. He will know that according to that report, investment—both overall, whole-economy investment and private sector investment—has outpaced the OBR’s forecast from March this year. I look forward to returning to those points later.

The Budget delivers choices that were fair and necessary—choices that deliver on the public’s priorities, and that bring about the change that this Government promised. This Government have chosen to cut the cost of living, delivering £150 off energy bills and freezing train fares and prescription charges. This Government have chosen to cut NHS waiting lists, delivering 5.2 million more appointments and announcing in the Budget 250 new neighbourhood health centres. This Government have chosen to lift 550,000 children out of relative poverty in this Parliament, by removing the two-child limit, and by expanding free breakfast clubs and free school meal eligibility.

[Carla Lockhart (Upper Bann) (DUP)]

The Government have chosen to absolutely decimate family farms across the whole United Kingdom. The Prime Minister was questioned yesterday by members of the Liaison Committee, and he was told that farmers have said that they might be better off dying before this tax change comes in. I feel that we need to let the reality of that sink in. His response was that Governments have to bring about sensible reform, but sensible reform is not someone lying in an early grave to avoid the break-up of their family farm. He also claimed that this policy was not targeted, and was merely a change to the tax regime, but when this Finance Bill decimates family farms, it certainly—

--- Later in debate ---

[Dan Tomlinson]

Thank you, Madam Deputy Speaker. I look forward to contributions from Members on both sides of the House on the various measures in the Finance Bill. On the point that the hon. Member raises, this Government considered really carefully the reforms that were announced at the Budget last year, and have put forward changes to agricultural property relief and business property relief. There is an additional £1 million allowance—an allowance that was made transferable between spouses in this Budget—and also a 50% discount on the inheritance tax rate, so tax on that higher allowance will be at 20%, rather than 40%.

As well as making changes to lift children out of poverty, this Government have chosen to increase the national living wage from 1 April 2026 by 4.1% to £12.71 an hour, and to increase the national minimum wage for 18 to 20-year-olds to £10.85.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

Will the Minister give way?

[Dan Tomlinson]

I happily give way—I look forward to it.

[Dave Doogan]

The Minister will know that for the vast majority of employees in Scotland, the increase in the national living wage is redundant, because it is less than the Scottish living wage. He talks about the things that the Government increased in the Budget; was it their intention to increase unemployment by 25% as a result of their jobs tax?

[Dan Tomlinson]

This Budget will lift thousands of children in Scotland out of poverty, because of decisions that we have made. This Government have made £10 billion more spending available to the Scottish Government, yet we still see public services failing up and down Scotland; the NHS is not working as well as it should north of the border.

[Matt Rodda (Reading Central) (Lab)]

The Minister is making an excellent series of points, and I commend him on behalf of 4,000 vulnerable children in Reading for the fantastic support he is offering them and their families. It is much deserved and appreciated by our community. I point out other significant benefits, such as the freezing of rail fares, continued bus fare subsidies, and economic measures that will drive growth across this country.

[Dan Tomlinson]

I thank my hon. Friend for his intervention—the first from a Labour Member. I look forward to many more from Labour hon. Friends, as well as Opposition Members. This Government have also chosen to cut Government borrowing every year, so that interest rates, already cut five times since the election, keep falling.

[Sir Oliver Dowden (Hertsmere) (Con)]

Will the Minister give way?

[Dan Tomlinson]

I give way to my constituency neighbour.

[Sir Oliver Dowden]

I thank my neighbour. The Minister did not answer this point made by the hon. Member for Angus and Perthshire Glens (Dave Doogan) about the effect of the jobs tax on unemployment. In my constituency, I have met countless businesses that have laid off staff, or have shifted staff to being self-employed. Does he accept, particularly given the unemployment figures today, that there is a direct link between the jobs tax and higher unemployment?

[Dan Tomlinson]

The OBR was aware of the tax changes announced in the previous Budget when it made its forecast just a few weeks ago. It expects that employment will rise in every year of this forecast; that every year, the figure will be higher than it was in March; and that there will be over 35 million people in work by the end of the decade.

As I was saying, this year, borrowing as a share of GDP will be at its lowest level in six years, and the Chancellor made the decision to more than double our headroom against the fiscal rules in this Budget to provide continued economic stability. This Finance Bill, alongside other Budget decisions, delivers choices that give people new opportunities and renew our public services. These choices will help lift thousands of children out of poverty, get more people into work and maintain the highest level of public sector investment in 40 years. I was struck by the response from the North East chamber of commerce, which welcomed the ending of the two-child limit, saying,

“The Chancellor is right to scrap the two-child benefit cap. Our members have long argued that this is one of the most powerful levers available to tackle the unacceptable rates of child poverty across our region and to support more parents into sustained and meaningful employment.”

Statements like that are further confirmation that lifting 500,000 children out of poverty is not just the right thing to do, in order to give our children the best start in life, but is an investment in the future and our economy. All of us will be better for it.

This Government have promised to deliver economic growth as our No. 1 priority.

[Robbie Moore (Keighley and Ilkley) (Con)]

I am not quite sure whether the Minister believes what he is reading, because UKHospitality has already done the sums on the impact that this Budget is having on many hard-working hospitality businesses across Keighley and Ilkley. Indeed, it has calculated that over the next three years, hospitality businesses in my constituency will have to pay on average an additional £13,690 per annum. Can the Minister say what the Budget will mean for the growth of hard-working hospitality businesses in my constituency?

[Dan Tomlinson]

The hon. Member said that he is not sure whether I believe what I am reading. I did write this myself, and I do very much believe it. We will have plenty of time to debate the business rates measures when we consider the relevant pieces of legislation and in Committee, I am sure. They are not specifically in the Finance (No. 2) Bill, but I am mentioning things that are not in the Bill, so of course, he is welcome to raise things that are in the Budget, too. At Treasury questions last week we discussed at length, with the shadow Front-Bench team and others, the relief and support that is now in the system to help businesses with the increases in valuations they have seen since the pandemic—there is over £4 billion of support over the next few years, with £2 billion coming this year alone. However, I thank the hon. Member for his intervention. Madam Deputy Speaker, I thought I might speak for 15 minutes, but we are 11 minutes in and I am only on page 2, so I will try to make some progress.

We are sticking to our commitments in the corporate tax road map, maintaining the headline rate of corporation tax—the lowest in the G7—and making reforms to capital allowances to support fiscal sustainability while retaining incentives to invest. We are going further to support companies to scale up and attract investment and talent by significantly expanding the enterprise management incentives company eligibility limits, to maintain the world-leading nature of this scheme. We are doubling the maximum amount that a company can raise through the enterprise investment scheme and venture capital trusts scheme, to make the schemes more generous and supportive for entrepreneurs, helping to support more investment in companies and improve access to finance for those we want to see make the transition from start-up to scale-up.

We are delivering a new service to support major investment projects with advance tax certainty, as committed to in the corporate tax road map. We are also introducing a 40% first-year allowance, allowing businesses to immediately write off a significant amount of their investment to reduce their corporation tax or income tax bill in the year that they make that investment. Overall, these growth measures and the many others we are delivering across the Government will result in the doubling of limits for our enterprise tax incentives and will support many scale-ups and businesses to attract capital as they grow.

This Finance Bill builds on many other measures announced at the Budget and delivered over this Parliament. We are expanding and continuing the work of the National Wealth Fund. We have committed £14 billion for Sizewell C, to help power more than 6 million homes. We are making rapid progress on enabling the delivery of a third runway at Heathrow, and we have provided £120 billion in additional capital investment for roads, rail and energy, including £15.6 billion for major city regions.

[Oliver Ryan (Burnley) (Lab/Co-op)]

I welcome the £50 million or £60 million that the Government have provided to Lancashire county council to provide good roads for my constituents. On the Minister’s point about business investment, I welcome the three-year holiday from the stamp duty reserve for new listings, which we are not talking about enough. That will be a huge benefit to newly listed companies in the UK and manages our competitiveness very well.

[Dan Tomlinson]

I, too, welcome that change in the Budget, and I commend my colleague the Economic Secretary to the Treasury for the work she has been doing on that—I am sure we will hear more about it in her closing remarks.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Will the Exchequer Secretary give way?

[Dan Tomlinson]

I will give way, and then I will try to make some progress, so that other Members can get in.

[Mr Carmichael]

I am grateful to the Exchequer Secretary for giving way. On the point of growth, he should be aware that, since the Budget last year, 49% of farm businesses have paused or cancelled planned investment, 10% have already downsized operations, and 21% intend to do so before next April. What are the Government going to do to restore confidence in farming to invest? Without that, there is no growth in the rural community.

[Dan Tomlinson]

I thank the right hon. Member for his point. We do want to see farming businesses in rural communities and businesses up and down the country investing and growing for the future. On the changes to agricultural property relief and business property relief, it is worth noting that the statistics suggest that up to 375 estates a year will be affected—a small proportion of the overall number—and that number has come down from 520, as was forecast at the previous Budget.

[Several hon. Members rose—]

[Dan Tomlinson]

If I may, I will try to make some progress so that other hon. Members are able to contribute.

This Government are delivering growth and are focused on driving investment in our economy. As I said earlier, whole-economy investment has risen by 4.2% in real terms since the start of the year, outperforming the OBR’s March forecast of a decline of 0.1%. As the shadow Chancellor will know, Britain has outperformed its growth forecast this year, with growth in 2025 upgraded to 1.5% from 1% in March.

Beyond growth, this Bill delivers a set of responsible choices that safeguard our economy and prepare us for the future. We have been clear that in order to achieve that we have had to take the decision to ask everyone to contribute more at the end of the decade to protect our public services. After a freeze that was initiated by the previous Government, this Bill maintains income tax thresholds for employees and the self-employed at current levels for a further three years, from April 2028 to April 2031. That is a fair choice. In 2029-30, three-quarters of the revenue from maintaining income tax and employee, self-employed and national insurance contribution thresholds is expected to come from the top half of households.

The Bill also takes action to ensure that income from assets is taxed more fairly, raising £2.2 billion in 2029-30 by increasing taxes on property dividend and savings interest income. The Government are narrowing the gap between taxes paid on work and taxes paid on income from assets. At the moment, for example, a tenant will pay national insurance on their income, and a landlord will not. With the extra 2p, we will be closing the gap between tax rates on landlords and on tenants. In 2029-30 around two-thirds of revenue from increases to dividend property and savings interest tax rates is expected to come from the top 20% of households. Importantly, there are choices we have not taken—choices that previous Governments have taken to borrow more in a fiscally irresponsible way, or to return to austerity, which would undermine our economy and society. We have also chosen not to increase the rate of corporation tax, and we have stuck to our corporation tax road map.

It is important that those with the broadest shoulders contribute more to protect our vital public services, and the Bill delivers previously announced reforms to tax wealth fairly, including a revised tax regime for carried interest. That sits wholly within the income tax framework to ensure that reward is taxed in line with its economic characteristics, removing the opportunity for individuals to use pensions as a vehicle for inheritance tax by bringing unspent pots into the scope of inheritance tax, and by reforming agricultural property relief and business property relief, while ensuring that any of the £1 million allowance for the 100% rate that is unused will be transferable between spouses and civil partners. Those decisions build on our action in the previous Finance Bill, including abolishing the non-dom tax status, ending tax breaks for private school fees, and raising the rates of capital gains tax. That currently raises £14 billion a year, with revenue expected to more than double to around £30 billion by 2030-31.

Fair choices also mean delivering justice for those affected by the infected blood scandal. The Government will extend the existing inheritance tax relief for infected blood compensation payments, so that if an infected or affected person has already died when compensation is paid, inheritance tax relief will instead apply on the death of the first living recipient of the compensation payment.

Fair choices in a Finance Bill also mean tackling serious reforms that have been ducked for too long. That means reforming tax reliefs that, while intentioned, have exploded in cost in recent years. This Government are reforming capital gains tax relief, which has allowed wealthy business owners to sell their shares without paying any capital gains tax. We are reducing the relief available for business owners who are selling their businesses to employee ownership trusts from 100% to 50%—a relief that the previous Government expected to cost less than £100 million a year in 2018-19, although published figures now show that the cost of the capital gains tax relief reached £600 million in 2021. Without any action, forecasts suggest that that could rise to more than 20 times the original costing, to £2 billion by 2028-29.

[Several hon. Members rose—]

[Dan Tomlinson]

I give way to the hon. Member for Keighley and Ilkley (Robbie Moore), who was the first to catch my eye on that occasion.

[Robbie Moore]

Business property relief impacts many family businesses across the country. What does the Minister say to Fibreline in my constituency, which has worked out that its BPR liability is about £850,000? The company employs 250 people in Keighley whose jobs are potentially at risk as a result of the business not being able to mitigate an inheritance tax liability that this Government are imposing on it.

[Dan Tomlinson]

Our proposals on APR and BPR mean that those with business or agricultural assets will have both the additional £1 million allowance and a tax rate that is half the rate that others within the system pay. My understanding is that the system will be more generous than the one in place before 1992, throughout the whole time that Margaret Thatcher was Prime Minister.

We are reforming the Motability scheme to end the VAT relief on top-up payments, which was a one-off payment required to lease more expensive vehicles on the scheme. We are also ending the application of insurance premium tax on leases to ensure that the scheme delivers value for money for the taxpayer, while choosing to continue to support disabled people.

We are introducing reforms to ensure that private hire vehicle operators will no longer be able to illegitimately exploit an administrative scheme intended for tour operators to pay a much lower rate of VAT than others.

[Graham Stuart]

On that point, will the Minister give way?

[Dan Tomlinson]

I will give way—persistence pays.

[Graham Stuart]

The Minister is always both gracious and generous. Further to the point made by my hon. Friend the Member for Keighley and Ilkley (Robbie Moore) about the impact of BPR, imagine a company that is worth £11 million. It will have a £2 million BPR tax payment to make. The person who inherits the shares will not have that £2 million, so they will have to extract that money from the business. Am I right in thinking that that would require £3.3 million to be deducted and taken out of the company in order to pay that £2 million in tax? Is that in the right order?

[Dan Tomlinson]

I am happy to discuss those numbers with the right hon. Member in more detail, either afterwards or I can come in and discuss those points with him, although I did not quite follow all of the maths—[Interruption.] I thank Members on the Conservative Front Bench for their intervention about that.

Increasing taxes on online gaming and betting is another change that we are making in the Budget, with the rate for remote gaming increasing from 21% to 40% from April 2026, and the rate of remote betting increasing from 15% to 25% from April 2027, while choosing to protect in-person betting and horseracing, which plays such an important role in our sporting culture and many local economies.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

The Minister will be aware that those rate changes will have a consequential impact on jobs, particularly in places such as Stoke-on-Trent, where thousands of people are employed by gambling companies. The rights and wrongs of gambling aside, there will be an impact on jobs. Is he willing to look at that issue with the industry going forward, so that we can mitigate the damage done to the sector and keep people in Stoke-on-Trent gainfully employed?

[Dan Tomlinson]

My hon. Friend is a strong advocate for his constituents and the businesses based in his part of the world. Those businesses contribute significant revenue to the Exchequer, and this Government are asking them to contribute a bit more in order for us to be able to continue to fund our public services in a sustainable way. I will continue to have conversations with him and others about the impact of the changes that the Government are announcing to this sector and others in the Budget and this Bill.

Alongside the choices I have mentioned, we are also taking action on the loan charge review. That will include accepting all but one of the recommendations of the independent review, and in some places going further than the review suggested. We are creating a new settlement opportunity to support those with outstanding liabilities to resolve their affairs with HMRC. This marks the start of a final opportunity to draw a line under this long-running issue. I sincerely and dearly hope for everyone involved that we will be able to move forward and that this issue can start to be part of people’s pasts, rather than a seemingly never-ending part of their future.

In tandem, we are delivering a package of measures to close in on promoters of marketed tax avoidance and help taxpayers to steer clear of the schemes that they promote. Those measures include a new prohibition on promoting avoidance arrangements that have no realistic prospect of success and new promoter action notices to require businesses to stop providing goods or services to promoters of tax avoidance where they are used in the promotion of avoidance.

[Matt Rodda]

The Minister is making an excellent point. May I commend him on his work on the loan charge? Many IT consultants in my constituency and across the Thames valley are grateful to the Treasury for looking into this matter. Many of them felt they were sold schemes that they did not always fully understand, and they are also grateful for the action to tackle inappropriate schemes being marketed at professional people. I thank him for his work on this matter.

[Dan Tomlinson]

That is very kind of my hon. Friend. I know that he and others on all sides of the House have made representations over many years on behalf of their constituents affected by the loan charge. I have met some of those affected and members of the all-party parliamentary group. In the months that I have been in this role, having been appointed only on 1 September, I have worked hard to ensure that we come forward with proposals that I hope will help to draw a line under this issue. I hope that those affected can see we have a reasonable and fair set of proposals that will help those who were subject to the loan charge to be able to come forward and to settle; I really encourage those individuals to come forward.

Alongside those changes, we are making steps to continue to close the tax gap by closing loopholes and removing barriers to ensure that people pay the tax that they owe, including raising an additional £2.4 billion in ’29-30 by introducing further reforms to pursue those who bend or break the rules to collect more unpaid taxes. We are also going to modernise the tax system to make it easier for taxpayers to get their tax right the first time. With the choices delivered in this Finance Bill, that will bring the total additional revenue raised by closing the tax gap in this Parliament to £10 billion by 2029-30.

My right hon. Friend the Chancellor has spoken about this Budget being

“a package, not a pick-and-mix”,

and that is so important for our public finances and our public services. Through this Bill, we are choosing to deliver long-overdue reforms to update our tax system so that it can work for a modern, dynamic and thriving economy, and funding vital policies such as the removal of the two-child limit, which will lift half a million children out of poverty.

This Bill is about delivering on choices: choices to protect working people; choices to cut energy bills, and to freeze train fares and prescription charges; choices to boost wages and reduce poverty; and choices to cut inflation to bring down mortgage costs. It delivers the Government’s commitment to this country to build a stronger and fairer economy in which living standards rise, to see child poverty fall, and to ensure that public services are improved up and down the country. With every measure in this Finance Bill being geared towards that goal, I commend this Bill to the House.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Chancellor.

Conduct of the Chancellor of the Exchequer

Dan Tomlinson Excerpts

Wednesday 10th December 2025 Commons Chamber

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I thank the Chief Secretary to the Treasury, my right hon. Friend the Member for Ealing North (James Murray), for his earlier remarks, which framed today’s debate rather well. As he set out, we have here an Opposition day debate, a chance for Members to really interrogate Government policy, to challenge our decisions, to say what they would do differently and to paint a picture of the kind of country that they would build if they were in charge. Oh, what a sight it would be! In short, an Opposition day debate is a chance to be a serious Opposition, but as my right hon. Friend set out in his opening remarks, they have not chosen to do that, instead preferring to rehash their already discredited complaints about process, which we have already addressed extensively, rather than talk about the Budget.

[Gareth Snell]

Will the Minister give way?

[Dan Tomlinson]

I am going to make some progress, if that is okay, because my hon. Friend will know that many other Members have not yet spoken and I might give way to them later.

It is worth recounting just how many times Conservative Members have chosen in the last few days to major on process rather than policy. They are very interested in what was said by whom and on what day, so let us recount it. On Wednesday 26 November, the Leader of the Opposition, in response to the Budget, raised process multiple times, introducing to Hansard the somewhat intriguing phrase “fiscal fandango”. No, me neither! Admittedly, this was immediately after the OBR had dumped the Budget just before the Chancellor stood up, so that is fair.

But then the Tory process paso doble—two can play at this game—really began. Thank you, everyone! On 27 November, the shadow Chancellor raised process in a Budget debate. On 2 December, the shadow Chief Secretary to the Treasury raised it in a Budget debate. On 3 December, the Leader of the Opposition raised it at Prime Minister’s questions. This was the same day that the Opposition called an urgent question on the resignation of the chair of the OBR, which had coincidentally happened during a statement two days earlier by the Chief Secretary to the Treasury on the OBR and its forecast. Yesterday, the Opposition Front Bench raised this at Treasury orals, and today we are having an Opposition day debate on the same topic after the Chancellor took questions on it this morning in the Treasury Committee.

All this political dancing has denied the Opposition the chance to scrutinise the Budget. I am not sure how much of it they have read. Let me remind them that the Budget will cut the cost of living, raise pay for those earning the least and invest in our NHS. It meets our fiscal rules and delivers £21.7 billion of headroom. It is a Budget that delivers on the promise of this Government and delivers for the British people. By contrast, the Opposition are stuck in the past, playing the songs of old again and hoping for a new audience.

[Shaun Davies]

There are 4,600 reasons in my constituency why this Budget is the right thing to do: 4,600 children who will be lifted out of poverty by the Budget. On the basis of the Opposition’s remarks, it is my understanding that the Conservative party would plunge those 4,600 children back into poverty as part of a £46 billion welfare cut if it were to win the next general election—as well as potentially scrapping the triple lock. Does my hon. Friend agree that that is morally bankrupt?

[Dan Tomlinson]

I agree with my hon. Friend, who is a strong advocate of ensuring that we do all we can to support people, lift people out of poverty, and grow our economy and our towns and cities across the country.

By contrast, the Opposition are stuck in the past, playing the songs of old again and hoping for a new audience. After a year and a half on the Opposition Benches, the Conservative party knows that all it has to offer the country is the same as it offered before: a reheated and not renewed set of Conservative policies, tax cuts for the wealthy, wages held down for the poorest, cuts to public services and a rise in child poverty.

The problem is not just that the Conservative party is playing the old tunes but that half the old band has jumped ship to join the more extreme party, which has not even bothered to show up to this debate. I do not know how the band will manage to perform without the likes of the hon. Members for Ashfield (Lee Anderson) and for East Wiltshire (Danny Kruger), Jonathan Gullis, Dame Andrea Jenkyns, Nadine Dorries, Ann Widdecombe, Sir Jake Berry, Mark Reckless, Maria Caulfield and Marco Longhi—those are just the Tory-to-Reform switchers I have heard of. There are many more who I think are probably as well known as I am, so I do have a soft spot for them. For completeness, let me remind the House of their service and their defection, too: Lia Nici, Chris Green, Anne Marie Morris, Graham Simpson, Adam Holloway, Alan Amos—

[Graham Stuart]

On a point of order, Madam Deputy Speaker. Last time I checked, this debate was supposed to be about the conduct of the Chancellor of the Exchequer. I know the Minister is relatively new to the Dispatch Box; perhaps he may need a little guidance.

[Madam Deputy Speaker (Judith Cummins)]

I thank the right hon. Gentleman for his point of order. I am sure the Minister has heard it and will return to his speech.

[Dan Tomlinson]

Indeed; I heard the point of order loud and clear. It is worth remembering that this is an Opposition day debate—I think it is within the remit to talk about the Opposition and the fact that they have lost all their players to the other team.

I also think it is time to move on from talking about process, because on this side of the House, we have a country to run, an economy to build and public services to mend. Instead of this subject, we could have talked about whether it is right to raise wages for those on the lowest incomes, but the Opposition did not want to bring that up. Maybe that is because wages have risen faster in the first 10 months of this Government than they did in the first decade of the Conservative Government, or maybe it is because it turns out that their latest policy is a real-terms cut to the living wage. We could have talked about the cost of living, but again, the Conservatives did not choose that as a topic because its mini-Budget crashed the economy and added thousands of pounds to mortgages, and since this Government have come to power, the Bank of England has cut interest rates.

[Rachel Hopkins (Luton South and South Bedfordshire) (Lab)]

The Minister makes a point about the previous disastrous mini-Budget of September 2023. The shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride), said at that time,

“I welcome much in this statement. There is a great deal that will help millions of families and businesses up and down the country.”—[Official Report, 23 September 2022; Vol. 719, c. 942.]

Does the Minister agree that the reason the right hon. Member focused on process is that his judgment on policy is so poor?

[Dan Tomlinson]

I agree entirely with my hon. Friend. Too many Conservative Members defended the mini-Budget, which crashed the economy and added thousands of pounds to mortgages. In contrast, since this Government have come to power, the Bank of England has cut interest rates five times, taking £1,200 off a typical two-year fixed rate mortgage. At this Budget, we cut £150 from the average energy bill, froze rail fares and prescription charges, and extended bus fare caps and fuel duty cuts, but the Conservatives do not want to talk about that either. They could have chosen in their Opposition day debate to talk about fiscal stability and increased headroom, but again, they chose not to do that because of the £21.7 billion of headroom that the Chancellor secured at the Budget, which will help protect our country from global shocks and unforeseen challenges.

Of course, the Conservatives do not want to talk about child poverty either because they know that this Budget has lifted 550,000 children out of poverty, whereas the last Government were content to leave them, preferring instead to rebrand the hungry children who they let down while in power as benefit scroungers. They should be treated as our future, not as our opponent.

I have a couple more minutes, so let me address some of the points made during the debate. I thank the Liberal Democrat spokesperson, the hon. Member for St Albans (Daisy Cooper), for engaging on policy. We have had conversations on business rates already this week, and I am sure that we will have more. We have begun the work to rebalance the system with a £900 million switch from the highest value properties to those on the high streets.

I thank my hon. Friend the Member for Harlow (Chris Vince) for his Thatcher quote. It was a good quote that bears repeating. She said,

“I always cheer up immensely…if they attack one personally, it means they have not a single political argument left.”

I thank the hon. Member for West Worcestershire (Dame Harriett Baldwin) for going through every single tax change and saying that she opposes them all. That is the sort of opposition we have got used to. Rather than constructive opposition, which comes forward with proposals that would raise revenue in a fair way, such as the changes on electric vehicle excise duty, which will stop us losing £12 billion of fuel duty revenue in the coming years, we just hear, “No, no, no,” over and over again. I thank my hon. Friend the Member for Loughborough (Dr Sandher). His experience in economics is richly valued in this place, and I enjoyed his speech, as I always do.

Finally, it has been a short debate, has it not, Madam Deputy Speaker? I am glad that the right hon. Member for Beverley and Holderness (Graham Stuart) took the time during the debate to read the Labour manifesto—that was much appreciated—and that he was able to clarify for the House that my right hon. Friend the Chief Secretary was right to say that we have stuck to our manifesto commitment.

[James Wild]

To bring the Minister back to the debate, it is about honesty and the real-world consequences of the briefing that happened around the Budget. Does the Treasury accept that hundreds of thousands of people drew down their pensions, which is an irrevocable decision—yes or no?

[Dan Tomlinson]

What the Treasury does accept is that at this Budget, the Government had to make the decisions to ensure that we could increase our fiscal stability and get borrowing falling in every single year. The previous Government were not able to control our public finances, and yet in every year of this forecast, borrowing will be falling, and we have more than doubled our headroom to £21.7 billion.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

Will the Minister give way?

[Dan Tomlinson]

Go on—that’s helpful.

[Dr Arthur]

I always try to be helpful, and I thank the Minister for giving way.

There was a lot of speculation about the Budget, but a lot of that came from the Opposition Benches. Every single clickbait headline was repeated in the Chamber to fuel speculation. It was incredibly damaging—does the Minister not agree?

[Dan Tomlinson]

I agree that the Opposition are incredibly damaging for the economy.

The clean-up operation of the disaster zone that was the last 14 years is well and truly under way. Our economic plan is working, with growth up, employment up, interest rates down and borrowing falling, with a Labour Budget focused on the British people delivered by a Labour Chancellor making the fair and right choices. We reject this absurd monologue of emotion from the Conservatives, and we will stick to our plan for a better Britain.

Question put.

Oral Answers to Questions

Dan Tomlinson Excerpts

Tuesday 9th December 2025 Commons Chamber

[Sir Ashley Fox (Bridgwater) (Con)]

18. What assessment she has made of the potential impact of extending freezes on income tax and national insurance thresholds on working people.

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

The Chancellor was clear at the Budget that we are taking the fair and necessary decisions on tax to do all we can to ensure that the contribution of working people is kept as low as possible. We have reduced the gap between taxes on income from assets and on income from work, stopped the unfairness that meant people could pay less council tax for a £10 million property than for a typical terraced house in much of England, and done much more.

[John Lamont]

There seems to be only one word that the Chancellor understands: tax. Her decision to continue the freeze on income tax thresholds is a hammer blow to working people. In fact, even one of the Chancellor’s favourite unions, Unison, has said:

“Freezing personal income tax thresholds disproportionately impacts lower and middle-income workers.”

Does the Chancellor agree with the Labour party’s union paymaster?

[Dan Tomlinson]

I am a bit confused by that question. The hon. Member said there was one word that was important. Let me give him one figure: £150. That is the amount we are taking off energy bills next year to help people to deal with the cost of living in the here and now. We are supporting people because of the mistakes that previous Governments made by not investing in our energy infrastructure and not investing in our future. We are picking up the pieces after the Conservatives did not take the necessary decisions.

[Sir Ashley Fox]

Extending the freeze on income tax thresholds will cost working families £900 a year. It will also drag many pensioners into paying income tax for the first time. Why is the Minister hitting these low-income families to pay more for welfare?

[Dan Tomlinson]

I suggest the hon. Member asks his Front Benchers why 75% of the impact of people paying more tax at the lower end is the result of decisions made by the previous Government, who spent seven years freezing income tax thresholds. It is a bit rich for the Conservatives to talk about this Government doing it for three years when they did it for seven years.

[Martin Rhodes (Glasgow North) (Lab)]

What assessment has the Minister made of the impact on working people of the historic increase in the living wage?

[Dan Tomlinson]

We have chosen to uplift the national living wage and the national minimum wage so that those on low incomes are properly rewarded for their hard work. It will benefit 2.7 million people, including many people in my hon. Friend’s constituency and across the whole country. I thank him and Members—particularly those on this side of the House—for their support in making sure that we can make work pay up and down the country.

[Mr Jonathan Brash (Hartlepool) (Lab)]

Pensioners in my constituency of Hartlepool who rely solely on the state pension have shared with me their concern that freezing the tax threshold will draw them into paying tax. Can the Minister confirm what the Chancellor has already said publicly, which is that pensioners who rely solely on the state pension will not be taxed during this Parliament?

[Dan Tomlinson]

Yes.

[Mr Speaker]

I call the Conservative spokesperson.

[Richard Fuller (North Bedfordshire) (Con)]

The Minister said this was “fair”—no, no, no. Perhaps breaking the election promise on tax thresholds is the reason why, by two to one, the public view the Budget as unfair, just 3% think it will make them better off, and two out of three think things will get worse. Does the Minister want to tell the public they are wrong, or will he explain to the House why this Budget has been received so badly by the British people?

[Dan Tomlinson]

The Conservative spokesperson talks about fairness. Let me just identify one element of unfairness he left in the tax system that this Government is correcting, and it is a popular measure when we look at the views of the public up and down the country. We on this side of the House do not think it is fair that someone in a £10 million property can pay less council tax than someone in a typical terraced house in his constituency, my constituency and constituencies across the whole of England. We are making that change to make things fairer in this country.

[Jack Rankin (Windsor) (Con)]

4. What assessment she has made of the potential impact of the autumn Budget 2025 on levels of incentives to work.

--- Later in debate ---

[Wera Hobhouse (Bath) (LD)]

20. What steps she is taking through the tax system to help reduce costs for small and medium-sized businesses.

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

Small and medium-sized businesses are vital to our economy and our communities, and the Government’s small business strategy, published in July this year, sets out our approach to supporting them. As temporary pandemic business rates relief ends and the new revaluation comes into effect, we are supporting the high street with £4 billion-worth of support through transitional relief and our supporting small business schemes, as well as through our long-term reforms to permanently lower the multipliers for eligible retail, hospitality and leisure properties, and support them with a significant package that will cap most of the increases this year for those who have seen large increases since the pandemic.

[Sir Julian Smith]

Last week, Skipton was voted the happiest town in Britain to live in. One of the reasons for that—[Hon. Members: “Is you!”]—is its hospitality sector. Through covid, energy cost rises, national insurance rises and other challenges, that hospitality sector is facing massive challenges. I urge the Government to look again at reliefs and multipliers. Over the weekend, so many pubs and hotels raised with me the fact that they are not going to invest. We need the growth and we need the jobs. Will the Government look at how they can make things easier for the pub and hospitality industry?

[Dan Tomlinson]

If I had a such a charming Member of Parliament, I would also be as happy as his constituents in Skipton. I thank him for his question. We considered the support really carefully in advance of the Budget decisions announced last month. There is a challenge in that the revaluation, which was instigated by the previous Government and is carried out independently by the Valuation Office Agency, means that some businesses have seen their values increase significantly since the pandemic. That is why the Government are putting in £4 billion of support over the coming years, with around half of that coming next year to support businesses. Many will see their increases capped at either £800 or 15%. We think that that support will provide significant help to those businesses, alongside the underlying reform we are making to rebalance the system in favour of the high street.

[Wera Hobhouse]

May I give the Minister another example in which the numbers simply do not stack up? Mr B’s independent bookshop in Bath will see its business rates bill rise by more than 70% after factoring in changes to rateable value. The changes were packaged as a move away from short-term fixes, yet vital discounts have been scrapped and replaced with less-generous support and an unclear transitional relief system. How can he justify such a stark increase in business rates? It is a challenge for Bath’s cherished bookshops—we have three—which we want to support.

[Dan Tomlinson]

It is important that we all communicate to the small businesses in our constituencies, as I was doing this weekend, that there is a difference when it comes to the increase in the rateable value. It may be that the business to which the hon. Lady refers—I like good small independent bookshops myself—has seen a large increase in its value since the pandemic, but precisely because that has happened in some cases, we are implementing a significant support package this year. That will mean that no business that has a rateable value of less than £100,000 will see an increase in its bills of more than either 15% or £800. There is a bit of a technical detail there, which I would be happy to go into with her, but the important thing is that there are significant protections on bills in place this year, even if rateable values have increased significantly since the pandemic.

[Clive Lewis (Norwich South) (Lab)]

In Norwich there is a saying: there is a church for every Sunday and a pub for every day of the week. After 14 years of austerity, the numbers are a lot lower. After this Budget, many pub landlords—small and medium-sized businesses—tell me that we are not going far enough, and that many of them will go under. They need more support, and they need it soon. If the changes go through, I fear that Norwich will not have that saying at all; we will have hardly any pubs. Can we not put more of the burden on the pub companies and big corporations, which should be paying their fair share, rather than on the small and medium-sized businesses and small pub landlords, who cannot pay what is coming at them?

[Dan Tomlinson]

One of the things we announced at the Budget is a rebalancing in the system away from properties that have large rateable values and towards the small businesses on our high streets. That shift from the large to the smaller properties is worth almost £1 billion and supports them in the business rates system, as part of our work to reform business rates and support our high streets.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I welcome the Government’s support for our high streets and the consultation on the business rates system, which the Treasury launched on 25 November. But it is not just high streets that are suffering. Under the current system, major transport infrastructure owners face crippling bills: Eurotunnel’s business rates valuation has tripled from 2017, so it has cancelled investment in its international freight hubs, and Heathrow Airport’s business rates bill will increase by millions of pounds. Will the Treasury’s consultation on 25 November give transparency and predictability—

[Mr Speaker]

Order. The hospitality sector might use the rail industry, with freight, so I am sure we can get something on that.

[Dan Tomlinson]

I am sure that many of us do jump on the train to support our hospitality businesses. The consultation that my hon. Friend mentions, which we published on the day of the Budget, is an important piece of work. Chapter 4 of our call for evidence on how we can reform business rates to support investment will be important. We recognise that airports and other large infrastructure are valued in a different way from other business properties, and we want to look at the changes that we can make to support those businesses, which have seen very significant increases in their rateable values. Under the scheme that we have announced, they will of course be capped as well.

[Mr Speaker]

I call the shadow Minister.

[James Wild (North West Norfolk) (Con)]

The Chancellor promised a new golden era of hospitality, but the reality of her business rates raid, as the British Beer and Pub Association has said, is

“sleepless nights, pay cuts and staff layoffs”

for publicans, who will be paying an extra £13,000 on average. Why did the Chancellor tell businesses last week that their taxes were going down when they are going up, and will she think again and change the multipliers?

[Dan Tomlinson]

The multipliers are a product of the change in the valuation, and they did come down. We brought them down even further for retail, hospitality and leisure businesses. Without intervention this year, the bills paid by pubs would have increased by 45% as a result of the increase in value since the pandemic; because of this Government’s significant intervention this year, bills are going up by 4%. That is the impact of the changes this Government have made.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Dan Tomlinson]

We have set out our plans to reduce the multipliers for retail, hospitality and leisure properties, which is a rebalancing in the system. It means that those businesses—particularly the smallest RHL properties—face the lowest tax rate in the system since 1991. At the same time, there is—[Interruption.] The hon. Lady shakes her head, but the tax rate is the lowest it has been since 1991. At the same time, there has been an unwinding of the reduction in values going into the pandemic, and because we are seeing a recovery and businesses are bouncing back, and their properties are worth more, there has been an increase in the values. We are spending £2 billion this year to cap those increases at either 5% or 15% for many of those businesses up and down the country.

[Kevin Bonavia (Stevenage) (Lab)]

7. What fiscal steps she is taking with Cabinet colleagues to reduce costs for commuters.

--- Later in debate ---

[Matt Vickers (Stockton West) (Con)]

T3. Since this Government came to office, 110,000 jobs have been lost in the hospitality sector and eight pubs are closing every week, but the Chancellor has made it worse. Jonathan at The Devonport has told me that his business rates are set to treble. Does the Chancellor realise that her Budget will cost people their jobs, landlords their businesses and communities their pubs?

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

Let us be clear: nobody’s business rate bills are trebling. If businesses come to talk to us about increases in their rateable values because of the unwinding of the effect of the pandemic, it is important that all of us, on both sides of the House, are clear that the Government have put in support to ensure that pubs and those that have seen their values go up will not see increases next year. If the pubs rateable value is more than £100,000, they will be capped at a 30% increase. If it is less, they will be capped at 15% or £800. That is £4 billion of support that this Government are providing.

[Tom Hayes (Bournemouth East) (Lab)]

An independent and effective OBR is critical for our country, but it needs to do better. Why can the OBR not count? Why can it not forecast accurately, given that the economy grew 50% faster than it had predicted in March? Why can it not even publish the Budget document without making a dog’s breakfast of it? Is it not time for the OBR to properly price pro-growth measures and get behind our growth mindset?

--- Later in debate ---

[Alison Bennett (Mid Sussex) (LD)]

T9.   The Government seem set on pushing on with the family farm tax, despite opposition from the Liberal Democrats—and indeed from Labour Members. Will the Minister at least revisit the forestalling clause, which would help older farmers in Mid Sussex and across the country to avoid the consequences of backdating the legislation?

[Dan Tomlinson]

At the Budget, we came forward with a revision to the policy to support people whose spouses have already passed away, and we made the allowance transferable between the spouses. That change will reduce the number of farms affected by the agricultural property relief changes from about 500—as was estimated at the previous Budget—to 375, when coupled with changes to the underlying economic forecast. The policy raises money from those with the largest estates in a fair way, and I encourage Members in all parts of the House to consider whether or not—

[Mr Speaker]

Ahem.

[Dan Tomlinson]

I will stop there, Mr Speaker.

[Alison Hume (Scarborough and Whitby) (Lab)]

Alexander Dennis is a British electric bus manufacturer employing more than 700 people in Scarborough. Major bus contracts are due to go live in early 2026. Will the Minister confirm that this Government are backing British-built buses over Chinese imports, and can he confirm that the changes to public procurement processes will be implemented in time for taxpayers’ money to be spent on buying British buses?

--- Later in debate ---

[Dan Tomlinson]

I thank my hon. Friend for her question and her continued campaigning on this issue, which I know is important to her constituents. On those who seek to bend the rules, companies like Airbnb now send data to His Majesty’s Revenue and Customs on all their hosts, and where hosts fail to provide the detail that HMRC requires, Airbnb stops payments until they do. However, we need to go further, and I will meet my hon. Friend to discuss this.

[Simon Hoare (North Dorset) (Con)]

In the hope that the Government had listened to the National Farmers’ Union and others, a North Dorset farming family sat to watch the Chancellor’s Budget statement, in expectation. They were disappointed with the announcement on the family farm tax. The farmer withdrew from his medical treatment, and three days later he died. That is how determined he was to keep the farm in his family. He knew the struggle that they would have had in meeting the tax bill after 1 April. I share that not to be inflammatory, but to ensure that Members on the Treasury Bench know that their decision on the family farm tax has direct consequences for people up and down the country.

[Dan Tomlinson]

Members on the Treasury Bench are fully aware of the fact that changes to inheritance tax have an effect on those who are older. In the changes to both agricultural and business property relief that we have put forward, we have ensured that there is a higher allowance, with an extra £1 million, and a tax rate that is half as low as everyone else pays. We think that these reforms, which raise money in a fair and sustainable way, will contribute to raising the revenue that we need, in a way that protects family farms. Of course, we understand that there will be impacts on people. That is why we have designed the policy in the way that we have, and why we came forward with the changes that we announced at the Budget just a few weeks ago.

[Rachael Maskell (York Central) (Lab/Co-op)]

Independent businesses in York are really struggling with the revaluation of business rates. In 2024 they were £6,200; in 2025 they are £15,000; and in 2026 they will be £19,100, after discounts. Will the Minister meet representatives from York High Street Forum to understand the challenge of those rates for my city?

[Dan Tomlinson]

I am happy to speak to my hon. Friend about the issues that she raises in her constituency.

[Rupert Lowe (Great Yarmouth) (Ind)]

The Chancellor has embarked on a Fabian programme of brutal tax-and-spend economics that might please the dwindling number of Labour voters, but is hollowing out the nation’s productive base. Those who take risks, invest long term and create high-quality jobs are increasingly voting with their feet. Record numbers of top earners—the rain-makers who actually bankroll public services—are leaving the UK for good, taking their wealth and, more importantly, their brain power with them. Does the Chancellor even begin to understand the lasting and irreversible damage that she is causing to the British economy?

The Customs Tariff (Establishment) (EU Exit) (Amendment) Regulations 2025

Dan Tomlinson Excerpts

Monday 8th December 2025 General Committees

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move,

That the Committee has considered the Customs Tariff (Establishment) (EU Exit) (Amendment) Regulations 2025 (S.I., 2025, No. 1199).

This statutory instrument updates the UK’s tariff schedule to correct two errors relating to three tariff lines. These tariff lines apply to imports of specific varieties of basmati rice and tropical fruit and nut jams—if any hon. Member knows what a nut jam is, I look forward to talking to them about it later in the Tea Room. Both errors will be corrected in “The Tariff of the United Kingdom” reference document that sets out the UK global tariff rates for each good. For context, these errors relate to only three out of many thousands of commodity codes.

First, the correction relating to tropical fruit and nut jams reinserts the correct tariff of 14% into the reference document. This tariff has applied in the UK’s tariff schedule since 2021, but in an update earlier this year, the rate was erroneously left blank, leaving it sadly undefined. Before the error was discovered, His Majesty’s Revenue and Customs continued to collect the correct 14% tariff rate on imports of these goods. To repay traders who paid this rate, HMRC will shortly start the process for issuing repayments. By correcting this error, the instrument removes uncertainty for traders and ensures that they pay the correct rate as introduced in 2021.

Secondly, the correction relating to specific varieties of basmati rice realigns the tariff rate applying to two commodity codes with the original policy intention, by increasing the rate from 0% to £25 a tonne. These two codes were introduced in 2023—so Conservative and Labour Governments are both responsible for one of these errors—and the tariff rate was erroneously set at 0% instead of £25 a tonne, as applies to other basmati rice codes. Similarly, the new codes did not require traders to certify that their rice was genuine basmati rice, which meant there was a risk that traders could import other varieties of rice under the two new codes, paying a significantly lower tariff rate than they should.

This instrument realigns the tariff with the original policy intention and eliminates the risk of circumvention, ensuring that all traders pay the correct duty. I do want to highlight, however, that less than 1% of basmati rice imports were declared under these two new codes in 2024, so the impact on traders will be minimal. I hope that hon. Members will join me in supporting this instrument, which I commend to the Committee.

--- Later in debate ---

[Dan Tomlinson]

The Opposition spokesman is right that the import of tropical fruit and nut jams is a relatively small import stream. To give him and other interested hon. Members a sense of quantity, we expect the total amount owed in repayments to be lower than £7,000—quite a small amount in the grand scheme of things.

The Opposition spokesman mentioned other tax changes in the Budget, which I believe are broadly out of scope of this Committee, but I will correct him about the overnight visitor levy. Mayors will have a choice as to whether to introduce it or not; the Government are not applying the tax ourselves. We believe in devolution and we want to enable mayors to choose whether to make that decision to raise more revenue and invest in their local areas. It is up to them. That is what genuine devolution looks like.

I sadly do not have an answer to the Opposition spokesman’s question about the volume of basmati rice imports, but it is an important topic and my officials will endeavour to write to him on it. In concluding, he reminds me that I may have made the biggest mistake of my political career to date by upsetting Paddington, and I will reflect on that deeply this evening, and in the days and weeks to come.

Question put and agreed to.

Draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025 Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025 Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025 Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025

Dan Tomlinson Excerpts

Monday 1st December 2025 General Committees

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move,

That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025.

[The Chair]

With this it will be convenient to consider the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025, the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025 and the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.

[Dan Tomlinson]

It is a pleasure to serve on this Committee with you as Chair, Mr Swayne.

The orders before the Committee give effect to the double taxation conventions, or DTCs, with Andorra, Peru, Portugal and Romania. Like all DTCs, these agreements will provide tax certainty to businesses and investors by removing double taxation and, importantly, without creating opportunities for the avoidance of tax. In doing so, they will remove barriers to cross-border trade and investment, support growth, and provide a clear and fair framework for taxing businesses that invest and trade across borders. That will benefit businesses and the economies of both the UK and our respective treaty partners.

The DTCs are based mainly on the OECD model tax convention, which contains a set of internationally agreed principles and standards that make them easier for businesses to understand and tax administrations to apply. Those standards ensure that DTCs are not used to avoid or evade tax. They include a statement to that effect in the preamble, and are clear that it is not a purpose of a DTC to create opportunities for tax evasion and avoidance.

The DTCs include a principal purpose test that denies treaty benefits in case of abuse. They also allow for the exchange of information between the UK and its treaty partners to facilitate tax transparency. Other anti-avoidance rules in the new treaties include a tie-breaker provision for determining corporate residence based on agreement between the competent authorities of the treaty partners. The orders include dispute resolution provisions, which provide that where a taxpayer considers that the DTC has not been applied correctly, they can present their case to either tax authority, allowing both countries to work together to resolve the issue.

Together, those features strengthen our collective defences against tax avoidance and evasion while supporting cross-border trade, investment and mutual growth. I commend all the orders to the Committee.

--- Later in debate ---

[Dan Tomlinson]

I—

[Lincoln Jopp (Spelthorne) (Con)]

Will the Minister give way?

[Dan Tomlinson]

I will.

--- Later in debate ---

[The Chair]

None was taken.

[Dan Tomlinson]

I thank the hon. Member for giving me the chance to correct the record that we have a Sir in the Chair today—Sir Desmond Swayne. I am very grateful for your chairmanship, Sir Desmond.

On the impact of these different DTCs, trade with Andorra is only £93 million a year, so the impact will be relatively small for some of these measures. The impact will be larger with both Portugal and Romania as they are already very significant trading partners and we trade a similar amount with both.

On the hon. Gentleman’s second question, Romania has ratified this already and Peru, Andorra and Portugal are expected to do so by the end of the year.

Is this the moment where I conclude, or do I sit down now?

[The Chair]

The choice is yours, Minister.

[Dan Tomlinson]

In closing, Mr Chair—

[Lincoln Jopp]

Sir Chair.

[Dan Tomlinson]

In closing, Sir Chair, the orders before the Committee implement DTCs between the United Kingdom, Andorra, Peru, Portugal and Romania. The conventions will ensure that we have a modern DTC in place with all four of these countries, which will provide a stable foundation for trade and investment to grow, while at the same time making it harder to avoid taxes here in the United Kingdom. I am grateful to all hon. Members—Sirs and non-Sirs—for their contributions to the debate.

Question put and agreed to.

Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025

Resolved,

That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025.—(Dan Tomlinson.) 

Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025

Resolved,

That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025.—(Dan Tomlinson.)

Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025

Resolved,

That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.—(Dan Tomlinson.)

Draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025 Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025 Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025 Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic)) Order 2025

Dan Tomlinson Excerpts

Monday 1st December 2025 General Committees

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move,

That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Peru) Order 2025.

[The Chair]

With this it will be convenient to consider the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025, the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025 and the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.

[Dan Tomlinson]

It is a pleasure to serve on this Committee with you as Chair, Mr Swayne.

The orders before the Committee give effect to the double taxation conventions, or DTCs, with Andorra, Peru, Portugal and Romania. Like all DTCs, these agreements will provide tax certainty to businesses and investors by removing double taxation and, importantly, without creating opportunities for the avoidance of tax. In doing so, they will remove barriers to cross-border trade and investment, support growth, and provide a clear and fair framework for taxing businesses that invest and trade across borders. That will benefit businesses and the economies of both the UK and our respective treaty partners.

The DTCs are based mainly on the OECD model tax convention, which contains a set of internationally agreed principles and standards that make them easier for businesses to understand and tax administrations to apply. Those standards ensure that DTCs are not used to avoid or evade tax. They include a statement to that effect in the preamble, and are clear that it is not a purpose of a DTC to create opportunities for tax evasion and avoidance.

The DTCs include a principal purpose test that denies treaty benefits in case of abuse. They also allow for the exchange of information between the UK and its treaty partners to facilitate tax transparency. Other anti-avoidance rules in the new treaties include a tie-breaker provision for determining corporate residence based on agreement between the competent authorities of the treaty partners. The orders include dispute resolution provisions, which provide that where a taxpayer considers that the DTC has not been applied correctly, they can present their case to either tax authority, allowing both countries to work together to resolve the issue.

Together, those features strengthen our collective defences against tax avoidance and evasion while supporting cross-border trade, investment and mutual growth. I commend all the orders to the Committee.

--- Later in debate ---

[Dan Tomlinson]

I—

[Lincoln Jopp (Spelthorne) (Con)]

Will the Minister give way?

[Dan Tomlinson]

I will.

--- Later in debate ---

[The Chair]

None was taken.

[Dan Tomlinson]

I thank the hon. Member for giving me the chance to correct the record that we have a Sir in the Chair today—Sir Desmond Swayne. I am very grateful for your chairmanship, Sir Desmond.

On the impact of these different DTCs, trade with Andorra is only £93 million a year, so the impact will be relatively small for some of these measures. The impact will be larger with both Portugal and Romania as they are already very significant trading partners and we trade a similar amount with both.

On the hon. Gentleman’s second question, Romania has ratified this already and Peru, Andorra and Portugal are expected to do so by the end of the year.

Is this the moment where I conclude, or do I sit down now?

[The Chair]

The choice is yours, Minister.

[Dan Tomlinson]

In closing, Mr Chair—

[Lincoln Jopp]

Sir Chair.

[Dan Tomlinson]

In closing, Sir Chair, the orders before the Committee implement DTCs between the United Kingdom, Andorra, Peru, Portugal and Romania. The conventions will ensure that we have a modern DTC in place with all four of these countries, which will provide a stable foundation for trade and investment to grow, while at the same time making it harder to avoid taxes here in the United Kingdom. I am grateful to all hon. Members—Sirs and non-Sirs—for their contributions to the debate.

Question put and agreed to.

Draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025

Resolved,

That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Romania) Order 2025.—(Dan Tomlinson.) 

Draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025

Resolved,

That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Andorra) Order 2025.—(Dan Tomlinson.)

Draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025

Resolved,

That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Portuguese Republic) Order 2025.—(Dan Tomlinson.)

Taxes

Dan Tomlinson Excerpts

Wednesday 12th November 2025 Commons Chamber

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I thank all right hon. and hon. Members for their contributions today, as well as my right hon. Friend the Chief Secretary to the Treasury for his opening remarks, and the hon. Member for Grantham and Bourne (Gareth Davies) for summing up for the Opposition. He was Exchequer Secretary to the Treasury for a time under the last Government, and he will know just how busy the period two weeks before a Budget can be for a junior Minister in His Majesty’s Treasury. I imagine that when he was in my position, 14 days out from a Budget or autumn statement, with officials rushing in and out of his office with advice on various measures, and a day full of meetings trying to get the details right, there was nothing more he would have wanted in the world than be called to the House for an Opposition day debate. I thank him and the shadow Chancellor for calling this debate at such a crucial time in the Budget-setting process.

I expect some interventions during my remarks over the next 10 to 15 minutes, and I encourage Members across the House to play what I will call Treasury Minister bingo. If I am asked questions about the upcoming Budget, I intend to respond with, “The Chancellor will make all decisions on tax and spend at the Budget, and I will not comment on speculation.” We can see how many interventions we get, and how many times we get to play Treasury Minister bingo. That is just to forewarn those who, like me, perhaps enjoy a game of bingo—

[Joe Robertson]

rose—

[Dan Tomlinson]

We already have an intervention, so here we go.

[Joe Robertson]

I appreciate that this is the end of a debate and the Minister is trying to be funny, but a lot of constituents I speak to do not find this period particularly funny, and would like the Minister to confirm that his Government will stick to their manifesto pledge. Please can the Minister not respond with the word “bingo”? This is a really serious matter.

[Dan Tomlinson]

I thank the hon. Member for his intervention. The Chancellor will make all decisions on tax and spend at the Budget, and I will not be commenting on speculation. I have said that is what I will say if people continue to intervene. We are two weeks out from a Budget, and I will not be commenting on speculation from the Dispatch Box today.

[Jerome Mayhew]

I have heard what the Minister says and I do not ask him to comment on the Budget, but can he confirm whether he thinks that manifesto pledges are important?

[Dan Tomlinson]

If the hon. Gentleman wants to ask questions about the manifesto, I am glad that he is interested in the change that this Government are bringing through their manifesto. We have invested in our NHS and introduced new taxes on non-doms. We have introduced free breakfast clubs, and invested in HMRC to reduce tax avoidance—we will come on to talk about that, after the contribution from my hon. Friend the Member for Harlow (Chris Vince). We have set up Great British Energy, and we are implementing the National Wealth Fund.

[Several hon. Members rose—]

[Dan Tomlinson]

Let me make a bit of progress if I may—I will happily take a further intervention in good time. It is a sorry fact, but it is true that Conservative Members squandered their time in power, just as they squandered much taxpayer money. After 14 years of failure they left people paying more for less, and enforced a policy of austerity for too long, which my hon. Friend the Member for Birmingham Northfield (Laurence Turner) spoke about in his contribution. That policy brought public services to their knees—something we needed to fix—and saddled us with so much debt that we now pay £1 in every £10 of public money in debt interest payments alone. I agree with the contribution from a Conservative Member who said that that is not a morally acceptable situation, but that is the situation we inherited, and one that we intend to change. Over the course of this Parliament the international comparisons bear out, and we are on track to reduce the deficit that we inherited faster than any other G7 economy. That is the stability that the Chancellor is returning to the public finances.

[Laurence Turner]

The Minister has just spoken about public services and touched on productivity. At the start of the debate, the shadow Chancellor talked about the importance of timely public sector pay settlements to productivity increases. Having been a union official in the aftermath of the strikes by ambulance workers, I have some insight into this issue. Ministers in the previous Government said that they wanted productivity increases, but negotiators for the Government had nothing to suggest on productivity links and they were asking the trade union for ideas.

[Dan Tomlinson]

I thank my hon. Friend for his comments and for his years of work and experience supporting public sector workers and our proud trade unionists.

Conservative Members have mentioned the statistics that have been published of late. There is much that we need to do to ensure that the investment that we make in the NHS comes with improvements in productivity and output. The Health Secretary was talking about that today in reference to our reforms to NHS England, and about ensuring that we are not duplicating spending in both the Department for Health and Social Care and NHS England. I thought that Conservative Members were against quangos, but it turns out that they are against that reform.

[Jerome Mayhew]

I am encouraged to hear that the Minister wants to link increased funding with productivity increases. In that spirit, why was the resident doctors’ pay rise not linked to any productivity increases?

[Dan Tomlinson]

In the end, in order to sort out the strikes we needed to give public sector workers a fair deal. The situation that they were left in was not fair, with their wages going up significantly less than prices over the 14 years that the Conservatives were in power. The Health Secretary has been clear about not wanting to go as far the pay settlement demanded, but the situation that we reached last year is right and proportionate, and we hope that we can continue to invest in reform of our NHS.

[Several hon. Members rose—]

[Dan Tomlinson]

Let me make a bit more progress—I am only on page 2 of a six page speech—[Interruption.] I am taking many interventions, but I will take fewer.

The previous Government saddled us with much debt, as we have talked about, with £1 in every £10 of public money going towards debt interest payments, perpetuating a stop-start cycle of public investments that left us with roads full of potholes, train lines that cannot even make it between London and the north of England, and an unpredictable business environment, with business taxation going up and down all the time. All that gave us an incredibly narrow base for regional growth, with few parts of the country forging ahead, while too many in the rest of the country fell behind.

Levelling up was a Conservative slogan, not a solution. Instead, this Labour Government are growing the economy and lifting living standards in all parts of the country, investing in infrastructure to get Britain building again, and working with local leaders and Members of Parliament to build pride in place and revitalise communities. That is the change that we are bringing. The Conservatives had the opportunity to invest in our public services, to upgrade rail, roads and connectivity, and to protect our NHS, but instead they threw money around with little regard for its value.

A key factor in our stalled productivity is that, time and again, the Conservatives had the option to choose economic responsibility, but they chose political convenience instead. The austerity that they pursued after the financial crisis, when interest rates were at record lows, was a sledgehammer to our economy, gutting public services and cutting the essential flows of investment that would have aided a faster recovery. As the hon. Member for Witney (Charlie Maynard) said, and as Liberal Democrat Members are wont to mention, they then went ahead and implemented a rushed and ill-conceived Brexit deal that brought extra costs to businesses and extra disruption to trade. When the pandemic arrived, our country was not ready. Our public services and our economy have been severely weakened.

[Gregory Stafford]

As I told the hon. Member yesterday, he has the second worst job in Government, which I think he is feeling today. Even if what he has just said is true—I do not agree with him—after the Budget last year, the Chancellor said that the slate was wiped clean and that no more tax rises or borrowing would be needed. What has changed between then and now?

[Dan Tomlinson]

I was glad to attend the hon. Member’s Westminster Hall debate last night on wine producers across the UK. I am impressed by his close reading of all the words of members of the Cabinet; I hope one day to be as diligent as him in following the utterances of the Chancellor, the Prime Minister and all Ministers.

When it comes to the inheritance that this Government and the British people are dealing with, let me say that if wage growth since the financial crisis continued at the pace that it had before, it is not that families in my constituency, in the constituency of the hon. Member for Farnham and Bordon (Gregory Stafford) and across the country would be £1,000 or £2,000 a year better off; they would be £12,000 a year better off. Imagine the difference that that would make to the businesses and communities across our country if we had not had that productivity stagnation.

In the end, we will see at the Budget that the OBR is implementing its review of productivity. I will not pre-empt that review, but it is right and proper that we ensure our fiscal forecasts are based on accurate understandings of what has happened in the past to our productivity, because the past is a guide to the future. I hope that this Government will continue to beat the outcomes that happened under the previous Government, when productivity almost flatlined, and that is exactly what this Budget will be about.

[Jerome Mayhew]

Will the Minister give way?

[Dan Tomlinson]

I will happily give way—it might be the final time I do so.

[Jerome Mayhew]

My hon. Friend the Member for Farnham and Bordon (Gregory Stafford) asked the Minister a specific question. In October last year, the Chancellor said, “We are not coming back for more. We have wiped the slate clean. From now on, it is on us.” What has happened between then and now? What has changed?

[Dan Tomlinson]

One of the things that has changed is that Conservative Members seem to have found £47 billion down the back of the sofa and are coming forward with plans that are not deliverable, just like they did when they were in government. They have done the job of a losing Opposition—we have been there in the past—whereby numbers used in opposition are not serious or credible. We all know where that ends up.

The Conservatives said recently that they would slash taxes and pay for it with £47 billion of fairyland spending cuts. For context, that is the equivalent of firing every police officer in the country. Of course, I am not saying that they will do that or that they have joined the “defund the police” brigade, but what would they do? We do not really know, because all we have is a menu without a price list.

[Josh Fenton-Glynn]

One unexplored area we could look at to raise some of the money we need is selling the brass neck of the Conservatives on the commodities market. Having cheered when Liz Truss delivered her mini-Budget, they now have the gall to lecture us about fiscal responsibility.

[Dan Tomlinson]

And the Conservatives have the gall to lecture us about managing the public finances well. They say that they want to cut civil service numbers. Between 2016 and when the Conservatives left office, there were 130,000 more civil servants. The former Member for Uxbridge and South Ruislip and former Prime Minister said that he would cut civil service numbers by 91,000; they then went up. In October ’23—when the Opposition spokesperson, the hon. Member for Grantham and Bourne (Gareth Davies), was in my role—the right hon. Member for Godalming and Ash (Sir Jeremy Hunt) unveiled an immediate cap on civil service numbers and pledged to cut them by 66,000; they then went up. Between May 2022 and July 2024, the numbers went up in every single quarter. I am not sure that the public would leave the Conservatives’ restaurant at all satisfied if they bought the items on their menu, because everything they have promised does not seem to turn into reality.

I will conclude, Madam Deputy Speaker.

[Mark Garnier]

More!

[Dan Tomlinson]

Hon. Members want more! Okay.

If this debate has taught us anything, it is simply this: not only do the Conservatives need to stay in opposition for longer, but I am sure that they will do so. So far, they have learned nothing from their time on the Government Benches. There is no humility for their mini-Budget, no plan for giving Britain a brighter future, and no grasp of the realities that the country and the world face. They also have no will to face up to reality, to show leadership or to make choices that will support our public services, businesses and citizens.

Meanwhile, this Government have given the country the fastest growth in the G7 in the first half of the year. We have raised wages and living standards, and the Bank of England has cut interest rates five times because of the economic stability we have brought, which has reduced mortgage payments and lowered the cost of borrowing. This Government have increased public investment in capital spending by over £120 billion over the course of this Parliament, building for the future—something that the Conservative party failed to do. That is the difference that a Government with British values at their heart can make. At this month’s Budget, we will put those values into practice again, with fairness and opportunity for all so that we can secure our economy, strengthen our public services and lift living standards for the British people.

Question put.

Alcohol Duty: UK Wine Sector

Dan Tomlinson Excerpts

Tuesday 11th November 2025 Westminster Hall

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I am glad to be serving under your chairmanship, Mr Turner. I am grateful to the hon. Member for Farnham and Bordon (Gregory Stafford) for securing this important debate, and for speaking so eloquently in support of the UK wine sector. It is fantastic to hear him speak about the sector’s growth, as well as its continuing progress on exports, which is a really good thing. The irony is not lost on me, though, that he said that Treasury Wine Estates has some reservations about the Treasury’s tax policy—I will look into that.

I heartily echo the hon. Gentleman’s praise for the UK wine industry’s significant contribution to our economy, culture and tourism. As he mentioned, the statistics speak for themselves: we are the world’s second largest wine importer, bringing in 1.7 billion bottles in 2024. Sales of both imported and home-grown wine support hundreds of thousands of jobs, particularly in hospitality and retail. In recent years, as many Members have mentioned, more and more people have taken up work in the UK’s domestic wine sector, which is much like a dessert wine—small, but strong.

Industry figures suggest that more than 1,000 vineyards and 200 wineries contribute to our rural economy, with land under vine growing fivefold since 2005. The hon. Member for Weald of Kent (Katie Lam) listed many of the wineries in her patch; one of the challenges of being a Parliamentary Private Secretary, like my hon. Friend the Member for Hastings and Rye (Helena Dollimore), is that they do not always get to speak in these debates. However, I have been reliably informed by note that the two Members have the same number of vineyards in their constituencies—there may have to be a little Kent-based competition.

It is great to see that the number of home-grown products is increasing, with production exceeding 10 million bottles last year, and with sales rising too. This Government are committed to fostering an environment in which the wine industry, like its vines, can thrive and grow.

The hon. Member for Farnham and Bordon, as well as other Opposition Members, made important points about the UK’s alcohol duty system. Before I turn to those points, I will first acknowledge the Government’s wider work to support the wine industry through agricultural grants and export promotion. The Government have committed at least £200 million to the farming innovation programme through to 2030, and we champion domestically produced wines on the international stage. For example, we showcased English sparkling wine at the Osaka expo earlier this year.

As I have mentioned English sparkling wine, it is important that I also mention the contribution of my hon. Friend the Member for Edinburgh South West (Dr Arthur), who talked about Scotland’s growing wine industry and the impact it is having on high streets. He also said that, in designing a sensible tax system, it is important that it takes account of the impact on the health of the population, which I think is reflected in the current system.

Members have spoken about the previous Government’s reform of the alcohol duty system. I am a Labour MP, so it is not lost on me that I am defending an alcohol duty system implemented by Conservative MPs, and that Conservative MPs are opposed to a system implemented by their own Government. We learned in opposition that it is not always wise to oppose the decisions made by our party when it was previously in government. Indeed, I think that one of the reasons we won the last election is because we were able to talk proudly and confidently of the achievements of previous Labour Governments. Anyway, it is up to Opposition Members to choose which aspects of previous Government policy they wish to support, or not.

As others have mentioned, the alcohol duty system is now based on the principle of taxing alcohol by strength, which means that alcohol duty increases with a product’s ABV. Although it is true that some higher-strength wines have faced increases in duty, that has been balanced by reductions in duty for lower-ABV wines, including some British wines. Prior to the reforms, wines with 11% ABV and wines with 14% ABV both paid the same duty per bottle. Now, there is a difference: wines with 11% ABV pay £2.43 in duty and wines with 14% ABV pay £3.10.

I am interested in the point made by the hon. Member for Weald of Kent about the extent to which British wine companies are producing wine with an ABV below 8.5%. I will consider that point. Indeed, I was thinking the same thing when I was reading up on this topic earlier today. However, I know the changes were introduced alongside conversations with industry representatives, and those conversations will continue as the changes bed in.

In recognition of the big changes that were implemented, it is right to assess their impacts after they have had time to take effect. We have said that will take place at least three years after their introduction in 2023. I will take that work forward next year with officials from HMRC, and I would welcome evidence from Members in this Chamber, including representations from the businesses and communities they represent, and of course I will engage with the wine industry.

The hon. Member for Farnham and Bordon said he had three points, but I think he had four in the end, including on the cumulative impact—I will try to address all four. On his third point, yes, we will consider in the round all aspects of the system’s current design. I do not want this review to be one that does not properly interrogate the design of the system, and I also do not want to pre-empt where it will get to, but in my role overseeing that review, I want us to look carefully at the design of the system as a whole. I think the system is sensible and fair, but I also know there are challenges that have been raised by Members today.

On the hon. Member’s big point about cuts or freezes to alcohol duty, it is worth realising that any such cuts or freezes would come at a cost to the Exchequer. The Office for Budget Responsibility produces the costings for any changes to taxation policy.

[James Wild]

They are always wrong.

[Dan Tomlinson]

The hon. Gentleman might think that some of the OBR’s assumptions are wrong. I encourage Members, if they have evidence, facts or figures that they want to put to the OBR on the elasticities—as I believe it is called when a tax rate is changed and has an impact on consumption—to send them in. The Government are confident in the OBR’s independence, but I will always want to ensure that we are putting forward accurate costings. In this instance, I believe that the OBR is in the right place when it comes to the elasticities, but Members should feel free to send in their own representations.

It is worth noting that freezing alcohol duty this year, if inflation was around 4%, would be equivalent to a 3.85% duty cut. Using HMRC’s published ready reckoner, this would cost the Exchequer roughly £440 million a year. It is right, therefore, that any decision on alcohol duty weighs the impact on overall revenues carefully. That is what I am confident that the Chancellor will do when she makes a decision in the Budget in just a few weeks.

I will try to run through some of the points made by Members in this debate. The hon. Members for Bridgwater, for Weald of Kent and for Farnham and Bordon, and the Opposition spokesperson, the hon. Member for North West Norfolk (James Wild), raised the issue of small producer relief for wine. That question was considered in detail as part of the previous Government’s review into alcohol duty, and as I have said, we will look to review it three years after the implementation that took place on 1 August 2023. We want to gather data and really look at the impact of the reforms. If Members want to come forward with proposals for change, then they should do so.

[Charlie Maynard]

Will the Minister give way?

[Dan Tomlinson]

Of course. I was looking forward to my first intervention, and will happily give way.

[Charlie Maynard]

I am just going to make a plea. HMRC is losing nearly £1 billion a year, which is incredibly bad news, and there are massive frictions and admin costs on business. Why would we not just go back to the easement? We can stand looking at this massive problem, or we can face facts and deal with it—and actually get money for the Exchequer.

--- Later in debate ---

[Dan Tomlinson]

We will look in the round at the changes that were implemented in 2023. I do not want to rush to implement something that does not work for the alcohol industry as a whole and is not fair or proportionate. But I understand the points that have been raised—they are well made and I have been listening.

The hon. Member for Farnham and Bordon also raised the cumulative impact on the wine industry of various changes that have been made by previous Governments, and the current Government, including around packaging. That does go to a big-picture point that is contested in this place about the tax rises implemented in the Budget last year. It is my view, and the view of the Chancellor and the Government, that in the round we had to make those decisions to raise revenue. I understand that it led to additional taxation on businesses, but that was on the largest businesses—around half of businesses, those with the fewest employees, are not paying any additional national insurance as a result of the changes last year. But I understand that there was an impact on those firms that had to absorb those additional taxation levels.

The Government think that it was the right decision in order to raise revenue to fund our public services and ensure that borrowing was not increased more than is sustainable. It is right that the Government ensure that we borrow to invest in the future of this country, something I wish the previous Government had done when interest rates were down at 0.5%. On a serious point, as the Minister with responsibility for taxation policy and the Treasury, I am looking closely at the impact of all the changes that have been introduced in previous years that require compliance and burden for business. We have to look carefully at them, because we want to see businesses growing, thriving and being able to hire more people and expand.

On business rates specifically, the Chancellor will come forward at the Budget with the permanently lower multipliers for retail, hospitality and leisure. That policy was set out in our manifesto and we will announce the detail at the Budget.

Let me turn to the Liberal Democrat spokesperson, the hon. Member for Witney (Charlie Maynard). I was glad to hear a shout-out for my hometown of Witney—I went to Wood Green school in his constituency; it is a wonderful part of the world. He, too, raised the point that one of the challenges with the move to the new system is the additional bands. If we look at it on a chart, the line is flat because the rate is the same, but of course I am aware that, depending on the ABV, producers are at different points on that line. That is something they have to deal with, and he is right that it is maybe more of a challenge for those who are producing wine and growing products. I do understand that; the point was well made, and there will be a review of the tax three years after implementation.

The hon. Member for Aberdeenshire North and Moray East (Seamus Logan) mentioned Scotch whisky and was interested to hear from me about the support that the Government are providing to the industry. I would say that the industry is set to be one of the biggest beneficiaries from the trade deal with India, which is set to reduce tariffs from 150% to 75% initially and then to 40% over time.

I do not think I have reached every single question that Members raised, but I hope they feel that I have covered the points that were made. To conclude, our Government are dedicated to supporting the UK wine industry through a range of measures, including ensuring an alcohol duty system that is fair and proportionate. I thank the hon. Member for Farnham and Bordon for securing the debate. I share his pride in this growing British success story and look forward to further discussions, including with WineGB and the Wine and Spirit Trade Association—tomorrow, in fact—about how we can build a prosperous and sustainable future for UK wine.