Farming and Inheritance Tax

Esther McVey Excerpts

Wednesday 4th December 2024 Commons Chamber

[Esther McVey (Tatton) (Con)]

I rise to join Conservative colleagues in calling on the Labour Government to stop this farm tax. It is a pleasure to follow the hon. Member for Penrith and Solway (Markus Campbell-Savours) and to have heard what he said about those false promises before the general election. Perhaps he, too, wants his Government to think again about what they are doing.

The other week, thousands of farmers took the extraordinary step of coming to Westminster to protest against this misguided policy. Unfortunately, the Government have put their head in the sand and are pursuing this policy. I hope this debate will make them think again and make them listen. I give the Exchequer Secretary 10 out of 10 for appearing in the Chamber today, even though he is a junior Minister at the Treasury—he certainly pulled the short straw by being put on the Front Bench today. I ask Ministers not just to come here, but to listen to what is being said and to really listen to the needs of our farming community.

We have heard a lot today about what British farmers do—they are stewards of the land, guardians of our food security and the backbone of the rural economy—yet the Government show a fundamental lack of understanding of how their policy will affect the industry. They are pushing ahead with it, even though it jeopardises not just farmers’ livelihoods but the very future of our countryside.

The numbers speak for themselves. While the Government claim that only 27% of farms will be affected, the National Farmers Union has warned that 75% of family farms will be affected. If I were in government and I saw the discrepancy between those numbers, I would go back to the drawing board, check the figures and ask why those discrepancies are there, not dig in deeper. I think the curse of this Labour Government and what they will be remembered for is their distinct lack of grasp of detail and of how the economy works, rural and otherwise. [Interruption.] Yes, this Budget has been a disaster of a Budget.

[Dame Caroline Dinenage (Gosport) (Con)]

My right hon. Friend is making excellent points. Does she agree that there is not only a lack of grasp of detail, but an astounding sense of arrogance—an inability to listen to those who know what they are doing, the farmers, and who have the experience and the expertise? There is just a blank inexplicable unwillingness by this Government to listen to the voices of expertise and of experience.

[Esther McVey]

I thank my hon. Friend for bringing that point to the House. This debate allows those on the Labour Benches to say, “Actually, let’s go back to the drawing board. Let’s look at this discrepancy in the numbers.” For all their talk of growth—I return to the Budget—this Government’s policies are delivering the exact opposite of growth, with the change to employer national insurance contributions and the change to rights from day one. They are talking down the economy and crushing growth in the economy, with the forecast being revised to be lower than it was.

Even if the Government do not want to hear this from me, and even if they do not want to hear it from the farmers, I want them to hear it from a Labour-supporting tax expert, Dan Neidle. He has eventually come to the conclusion that Labour’s farm tax is a dog’s dinner of a policy. Originally, Dan had criticised what he saw as “over-the-top coverage” of the impact these tax changes would have, but he says that on closer inspection he has reversed his decision, remarking that these Budget changes would hit

“farmers too hard and tax avoiders too lightly.”

He argues that the policy needs to change. Dan Neidle has said that the Treasury should raise the inheritance tax cap dramatically to around £20 million so

“only the largest and most sophisticated farm businesses become subject to IHT”.

Those on the Labour Benches might not want to listen to me, but I hope they will listen to one of their own tax experts.

[Sam Rushworth]

A moment ago, we heard talk from the Liberal Democrat Benches of a family farm tax and land taxes. It now seems that the right hon. Lady is suggesting we take up Dan Neidle’s suggestion. Will she confirm whether that is the case?

[Esther McVey]

It would be good if Members listened to what I said. I said it is not too late for Labour to reverse this policy; even their own tax advisers are saying, on closer inspection, it needs to be reversed. That is what I am asking those on the Government Benches to do.

We have heard today that farmers are asset-rich, but in reality they are cash poor, and that is the crux of the matter before us today. In the time I have left, I will mention a couple of farmers from my constituency. A seventh-generation farmer told me she was hoping to pass her farm on to the eighth generation, but that now does not seem possible because if they have to sell a proportion of the land, which they will, that will make the whole farm is unviable.

Another farmer of mine, Richard Shepherd, a few years ago built a state-of-the-art cow cubicle shed for their dairy herd, a piece of modern technology he believed would prepare the farm for the challenges of the 21st century, investing in methods to produce high-quality, affordable and nutritious food—the type of innovation this country will come to rely on for food security in the future. However, now, with this change from the Labour Government, he will owe between £600,000 and over £1 million in inheritance tax. He has said that, “Like any other business, we need confidence to invest in our farms. That’s what we wanted to do: we wanted to grow our farm, invest in it, and this will destroy this.”

Richard Barnett, an accountant who works with many farmers in my constituency, has warned of two immediate consequences of these proposed changes. First, there will be an increase in the number of individuals seeking to acquire farmland up to £1 million to mitigate inheritance tax, resulting in a reduction in the amount of tax that the Treasury can expect to generate from this policy, as well as an increase in land prices. Secondly, he expects a consequence of these changes to be that the financial industry will enter the land market with individuals investing up to £1 million in farmland, acquiring it and then we will see farmland being lost—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. I call Callum Anderson.