Finance (No. 2) Bill

Edward Leigh Excerpts

2nd reading
Tuesday 16th December 2025 Commons Chamber

[Ben Lake (Ceredigion Preseli) (PC)]

I am pleased to speak in this debate on the Finance (No. 2) Bill. I have now spoken in most of the Finance Bill debates since I was first elected to represent the people of Ceredigion in 2017, and subsequently, since last year, I now also represent the good people of Preseli, in north Pembrokeshire. In advance of all Finance Bill debates I make the effort to consult widely with my communities, in particular with the small businesses that form such an important part of the economy in my constituency. In all the years that I have served as a Member of Parliament, never has the sense of fear, the lack of confidence and the uncertainty been so palpable when I have met businesses in my constituency.

If I reflect briefly on the structure of the economy of the constituency, it is perhaps no surprise that they should be so worried about the measures in this Budget. As of March this year, there were some 5,500 businesses registered in Ceredigion Preseli—that number may well be slightly lower by next March—and 81% of them are classified as small businesses, with fewer than 50 employees, which makes Ceredigion Preseli the small business capital of Wales. It is a rural and coastal constituency, so the industries of agriculture and hospitality are key pillars of our economy. Indeed, 35% of all businesses are classified as being in the agricultural, forestry or fishing sector.

Much has already been said in the debate about the changes to the agricultural property relief and the business property relief, and the concerns that these changes have caused for small businesses and small family farms across the United Kingdom. We have heard other Members, particularly the right hon. Member for Orkney and Shetland (Mr Carmichael), eloquently speak on this matter. As he mentioned, we have already seen how these proposals have changed the way in which our small businesses, particularly farm businesses, operate. Some 55% of small businesses and 49% of farm businesses have already cancelled proposed investment projects in anticipation of the changes. Family Business UK estimates that in my constituency these changes alone will lead to the loss of some 250 jobs and deliver a £13 million hit to my constituency’s gross value added.

There is a real danger with these changes that the Government will deliver incredibly long-lasting harm to small businesses across the country, especially in rural areas. It is particularly disappointing that the Government have refused to pause, at least, these changes so that they can properly understand the impact that they will have on rural areas. Many figures and statistics have been bandied about in the many debates that we have had in the past months about the prevailing facts of these changes, but the Government have not undertaken a full impact assessment, as follows most policy decisions that they take.

[Sir Edward Leigh (Gainsborough) (Con)]

I am intervening on the hon. Gentleman because we both represent rural constituencies—he in Wales and me in Lincolnshire. Our constituencies are very different in their rural aspect, but both are affected equally badly by the family farm tax. Many of my farms may be larger than his, but their income is still quite marginal. So many of us representing rural areas cannot understand why the Government have not been prepared to compromise, listen to the NFU and, if necessary, take more resources from the big estates but preserve our family farms.

[Ben Lake]

I very much agree with the right hon. Member. That is a point of real bemusement and confusion for many of my constituents.

The Government have not looked for or sought compromise or engaged with the alternative proposals presented by the NFU and the Farmers Union of Wales. Some consensus is to be found, if only the Government would budge and were willing to compromise ever so slightly, so that they can achieve the objectives they so eloquently pointed out are the intention of the policy without sacrificing hundreds if not thousands of family farms and businesses across rural Britain, particularly in my constituency.

That probably underlines a growing sense that I have had. Although my constituency is only 170-odd miles from Westminster and Whitehall, where many of these decisions are dreamt up and subsequently implemented on us, we may as well live on the moon, such is the disconnect between the policies that are sometimes made here and the impact that they have on the ground. There is a lack of effort to try to understand why so many businesses and people in my communities are so fearful about the impact that these proposals will have on their lives.

Let me add that some 15% of all jobs in my constituency are in hospitality. There was a missed opportunity in this Budget for the Government to look again at the VAT for hospitality. That would have done a world of good and given much-needed confidence to an industry and sector that are suffering dreadfully at the moment with the cumulative impact of different price increases as well as new taxes. A VAT cut on hospitality would have been very much welcome.

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[Sir Edward Leigh]

My hon. Friend was brought up in a notable local farming family in my constituency, and the reason why the House is listening to him is that he has been bred into farming and knows about farming. Would he like to say what, from his own family’s experience, this means for farmers in Lincolnshire? Some people say that Lincolnshire is full of large estates and all the rest of it. No, it is full of working farms, and he can speak with authority on this subject.

[Robbie Moore]

The point to make quite clearly is that every single farming business will, in one way or another, be impacted by the £1 million threshold kicking in. Why? Because for an arable farm in Lincolnshire, Cambridgeshire or wherever it is, the price of feed wheat is still at about the same price it was 20 years ago, but the costs of all the inputs have been rising. Not only are such businesses subject to cash-flow challenges as a result of this Government removing the delinked payments —dramatically dropping them to £600—as well as removing the sustainable farming incentive and bringing in the fertiliser tax or the double cab pick-up tax, but they will be impacted by the changes to inheritance tax. That impact will be felt by hill farmers in Keighley and Ilkley; arable farmers in Lincolnshire or, dare I say it, down in Cornwall; and farmers wherever there are, even those subject to high land values in Northern Ireland. This Government must listen to our farming community right now, because whether farmers come down today or tomorrow to make noise with their tractors outside, I hope they continue coming to make sure that this Government listen.

It is not just our farming community that is impacted by the IHT changes. This has an impact on our family businesses, our hospitality businesses, our breweries and our manufacturing and engineering businesses. That is why I simply cannot understand why we have not heard from Back-Bench Labour MPs representing urban constituencies, who may be representing a manufacturing or engineering business, a hospitality business or a hotelier. Why on earth have those with such family businesses in their constituencies not been loud and proud in making noises to the Chancellor about the negative impacts these IHT changes will have on our many family businesses?

Finance (No. 2) Bill

Edward Leigh Excerpts

Committee of the whole House
Tuesday 13th January 2026 Commons Chamber

[James Wild]

Indeed. When we brought in the new duty system, we focused on the strength of alcohol in terms of the tax. We want to encourage more people into the hospitality sector, but the Government seem to have a policy of driving people away from going into pubs—and not just Labour MPs.

In government, we recognised the importance of those sectors to jobs, to our communities and to growth, and the simplified duty system, including the two new reliefs—draught relief and small producer relief—were warmly welcomed. My hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) made the point that the Government are choosing not to implement similar measures on draught relief. At the 2023 autumn statement we froze alcohol duty rates, and we extended that freeze in the spring Budget of 2024. I am proud to support that record: we had a Government working with the sector, not against it. It gives me no pleasure to say that this Government have chosen a very different path.

[Sir Edward Leigh (Gainsborough) (Con)]

My hon. Friend and I both represent large, rural constituencies. Could Members across the House think creatively about how we are going to save the great British rural pub? That could be by giving special credence to those who sell draught beer, rather than selling it in supermarkets, or through national insurance—all that sort of thing. Otherwise a great institution, which most people have to drive to, will be in danger of extinction. Are those pubs not part of our history?

[James Wild]

They absolutely are. I would be happy to come to my right hon. Friend’s constituency to discuss this over a pint in one of those small rural pubs, which are the hub of our villages and hamlets. Once they are gone, it is very difficult to replace them. The Government clearly have the hospitality sector in their crosshairs, and clause 86 is just the latest salvo.

This is no small corner of the economy. Some 3.5 million people are employed directly in the sector, which invests £7 billion a year, yet the industry is being punished by the Chancellor’s decisions and this clause. UKHospitality’s “#TaxedOut” campaign has highlighted the nearly 90,000 jobs lost in this sector. With unemployment now above 5%, young people in particular are paying the price. That is a consequence of the Chancellor’s damaging tax rises, which were supported by Labour Members.

Higher alcohol duties, the jobs tax, energy bills and soaring business rates are layering cost on cost. It is little wonder that UKHospitality has called the Government’s approach a “hammer blow”.

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[Sir Edward Leigh]

The hon. Lady is giving a very good speech. I hope, as the Liberal Democrat spokesman, she will say just a tiny bit more about rural pubs. I think a lot of urban Members do not understand the context. Where I live here in Westminster, it takes me one minute to walk to my local—one minute. Where I live in the Lincolnshire Wolds, it takes me one hour to walk to the pub—one hour. Everybody who accesses pubs in rural England has to go there by car. We do not ride horses any more, and it is too dangerous to walk on the road or take a bicycle. The Government have to understand that the rural pub is in real danger from the alcohol limits and other measures.

[Daisy Cooper]

I am incredibly grateful to the right hon. Member for making that point. I am the MP for St Albans, which is a small city, but I am a Suffolk girl born and bred. I know how valuable rural pubs are. They provide all sorts of services: they look after older people and single people; they are a fantastic community hub; and they provide employment for young people—one of my first jobs, aside from apple picking, was working in a pub—so I understand the vital importance of pubs in every single village, town, parish and hamlet up and down the United Kingdom. I am grateful to him for making that point.

In closing, I hope that when the Government respond this evening they provide answers to some of these questions. What did Ministers know and when? If the VOA sent that sector information on valuations, when was it sent? When did it send the information on pubs, specifically? If the VOA did tell Ministers that rateable values had at least doubled for more than 5,000 pubs, how is it possible that Ministers did not know? Why have we still not had a statement from the Government on what they are trying to do? Will their announcement extend to the rest of the hospitality industry, or just to pubs? Will the Government now use the full powers that they gave themselves? I cannot cost this, because I have not been given the numbers despite repeated attempts to get them. Will the Government consider a VAT cut?

Finally, the only rumour we have heard about what the Government may be considering are the changes to licensing laws, so let me close with this point: if your pub is empty, you do not want to keep it open for longer, paying more money to keep the lights on, the radiators heated and the staff behind the bar. That is not an answer to this problem.