Budget Resolutions

Debate between Edward Leigh and Rachael Maskell

Wednesday 26th November 2025 Commons Chamber

[Sir Edward Leigh]

I was not actually making that point. What we were discussing earlier in the year was people seeking work, and trying to encourage people to get back into work. I can understand the political imperative of what the Chancellor has done today—to sustain her position with her Back Benchers—but the problem is that the Government will create a perverse incentive for people on benefit with larger families to stay out of work. I am not sure that is good for their morale or the economy. It is not good for anybody. It seems a very easy hit for the Chancellor today, but I think it will have perverse results.

As a Member representing a rural constituency, I want to say a word about the family farm tax. The Budget’s extension of inheritance tax for business assets over £1 million has, as we know, imposed a major new burden on long-established family farms in my constituency and elsewhere. Although I could understand the Government targeting larger estates and people who were acquiring estates to avoid inheritance tax, the new family farm tax affects not just large landed estates but ordinary farms worked by generations of the same families. I recently visited a tenant farmer in my constituency. He is affected because his tenancy—he does not own the and—is a capital asset, and he will be taxed perhaps as much as £300,000 on it, which affects the family’s ability to stay in farming.

As we know, many family farmers lack liquid assets, which forces them to hold cash back, restructure, borrow or consider selling part of their business. Because the dividends used to pay inheritance tax are themselves taxed, these family farms face an effective tax rate of about 33%. The measure affects a significant share of medium-sized, long-standing firms even though it raises less than £500 million annually. It achieves maximum social and economic destruction for minimal financial reward. The policy also discourages business growth, because expanding a family firm increases future tax liabilities on heirs.

Some advisers are recommending that owners sell businesses outright to avoid future tax complications. A climate of unpredictable tax changes creates fear among owners and undermines long-term planning. The uncertainty over succession planning is freezing investment and expansion across affected businesses. The arguments can be repeated, but I appeal to the Government to listen to the National Farmers Union, which has come up with sensible compromises that would keep family farms in business and achieve the Government’s objective.

Let me say a bit about the benefits bill. Four million universal credit claimants are now excused from even looking for a job. This is a disaster in terms of self-reliance, the economy and much else. We know that the numbers have grown sharply since the pandemic. A surge in reported illnesses—particularly mental health conditions—is the main driver. Two thirds of recent work capability assessments cite mental or behavioural disorders. My right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) has blamed the collapse in the assessment process for the rise in successful claims, with remote and paper-based assessments introduced during covid having weakened checks on eligibility. That, again, is something on which we could co-operate across the House. It is a question not just of cutting benefits but of summoning people in, helping them and giving them confidence to try to get back into the workplace. Unless we do that and tackle the perverse incentives in the whole benefits system that discourage people from working, we will fail as a nation.

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

I like drilling into the data and getting to the facts. You can see a correlation between the rise in people claiming social security and the rise in waiting lists in the NHS—they map identically through all Parliaments, whether Tory or Labour. Will the right hon. Member look at the data before making assumptions? Getting waiting lists down has got to be our objective.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. The hon. Member used the term “you”. Perhaps focusing, and looking at the Chair, will stop colleagues from doing so.