Agricultural and Business Property Relief

Freddie van Mierlo Excerpts

Tuesday 14th January 2025 Westminster Hall

[Graham Stuart]

My hon. Friend is right. I say to the Minister that rather than looking at the issue through a fairness lens or an “attack wealth” lens, it must be in terms of incentives. Incentives are what drives behaviour, and behaviour is what drives wealth creation and security. If we come at it with some sort of A-level politics student’s approach, rather than one grounded in human behaviour and incentive, and get it wrong, we will see reduced investment from farm to farm and business to business.

If someone is not buying that new piece of planting machinery, they will not be investing in the training of their staff or they will not take on that extra employee who would have been brought on, because to justify expenditure they needed to invest in them, pay them more, and bring on more staff. All of that goes into reverse. I hope that as they come face to face with the realities of being responsible for the economy, Ministers will take that onboard and start to have a different philosophical approach in the way they do policy.

[Freddie van Mierlo (Henley and Thame) (LD)]

Does the right hon. Member share the concerns that my farmers have about their mental health, who are already in an industry where mental health issues are very high? They are concerned about the deadline of April 2026 and what impact that could have on their wellbeing.

[Graham Stuart]

I do. Someone only has to meet farmers to know that farming is already quite a lonely profession, with a high level of suicide anyway and high rates of depression. Combining that with this figure, it sounds hyperbolic to suggest that people will kill themselves ahead of this deadline, but knowing the farmers as I do in my area, I do not find it that hyperbolic. I hope it proves not to be the case, but it is a serious issue to be considered.

The impact of changes to BPR extends beyond farming communities. When asked about the changes, 85% of family businesses surveyed by the Confederation of British Industry said they would reduce investment by an average of 17%, an issue which colleagues are rightly raising. That will stifle long-term growth and harm the broader network of businesses that depend on them. They say that trust takes years to build, seconds to break and forever to repair. As I walked down Whitehall, shoulder to shoulder with farmers, their anger was palpable because they had believed the Prime Minister’s promises yet were betrayed. To Labour’s credit, it won the trust of rural Britain, through every door knocked, leaflet printed and promise made. It went from representing two rural seats in 2019 to 40 today.

The Prime Minister pledged to form a new relationship with farmers based on respect. My right hon. Friend the Member for Salisbury (John Glen) questioned where those proud rural Labour MPs are today; they are certainly not here facing the music. As usual, they are leaving the Minister to do it on his own. He asked us to judge his Government on their actions and not their words, so that is what we will do. In November 2023, the current Environment Secretary, in a room full of farmers, looked them straight in the eye and told them

“We have no intention of changing APR.”

By November 2024, that promise meant nothing. Labour waited 14 years to deliver its Budget, and it made a choice not just to change APR, but halve it. One constituent shared their shock as they calculated the impact, realising it would cost their family £300,000. Another constituent, William Hodgson, who runs a 600-acre farm near Withernsea with his mother, faces an inheritance tax bill of £1.5 million, with a post-tax profit of £150,000 a year. That means he would have to dedicate an entire decade of profits just to cover the cost of that tax. It was at that moment that the most valuable currency in politics—trust—was lost.

In February 2024, the Prime Minister told the NFU that it deserves a Government that listens and heeds early warnings. The planned changes to APR are not due until 2026, leaving the Prime Minister with one year, two fiscal events and ample parliamentary sitting days, with many colleagues all too happy to constructively work with him, to come to this House and tell us that he has listened and will change course. The question is whether he has the courage to do so.

It will have been hard to hear all of us and our chants while he was in Rio and we were in Whitehall; farmers at his north London surgeries will be few and far between. However, I hope he will listen to the hon. Member for Penrith and Solway (Markus Campbell-Savours), on his own side, who spoke bravely against the policy during the debate in the Chamber last month.

Finance Bill

Freddie van Mierlo Excerpts

Committee of the whole House
Wednesday 11th December 2024 Commons Chamber

[Dr Sandher]

By building the houses we need, we get the revenue from the tax changes we see today. Indeed, that is the entire point of our programme, in addition to the planning reforms that my hon. Friend the Member for Reading Central (Matt Rodda) referred to. From the tax revenue we raise from the measure we are debating and others, we will build a nation where every person has a stake in our society and a nation where working hard makes a difference.

[Freddie van Mierlo (Henley and Thame) (LD)]

Will the hon. Gentleman give way?

[Dr Sandher]

I will make some progress. We are creating good jobs through our measures in the green transition and the caring economy and yes, building homes for the young to live in. Our warm homes plan will upgrade 300,000 homes and create tens of thousands of good construction jobs. Our expansion in early years childcare will see more women in work and tens of thousands more jobs. Our affordable homes programme means more homes for young people, and for those who are struck down by hopelessness—

--- Later in debate ---

[Damian Hinds (East Hampshire) (Con)]

I rise to speak to new clause 8, and to refer to clauses 47 to 49.

Clearly, just six or so months in, we will not have seen the full effects of these measures, but we will have started to see them. We will have heard whether there are concerns from faith leaders, and what the early effects are on the number of applications for EHCP plans and so on. It is also right that we have asked that, within 18 months of this Act being passed, we report back on the impact of the music and dance scheme, on which we know there has been a partial concession from the Government, but it remains a very sensitive area none the less.

The Government say that they expect to raise £1.5 billion from this measure in 2025-26, rising to £1.7 billion—I think—in 2029-30. They expect 3,000 children to be displaced in academic year 2024-25; 14,000 in academic year 2025-26; and 35,000 eventually. These are enormous numbers of children who could have their education disrupted. Parents will be denied a choice that would be open to them in most other places in the world. It is also important that we look at the assumptions behind these numbers from HMRC’s policy paper—they are the exact assumptions that may then come into question in that post-legislative review, which our new clause 8 calls for.

The Government first expect fees to rise by 10% on average as a result of these measures. In fact, the actual mathematical cost of putting 20% VAT on fees is, in fact, an increase in cost of about 15%, by the time we net off the ability to reclaim cost on inputs. More significantly, we must put it in the context of everything else that is going on. This year, we are also seeing a business rates increase for about half of private schools, an increase in contributions on the teachers’ pension scheme, and as with so many other sectors, a massive hike in national insurance contributions. Those are on top of any other normal cost pressures that other organisations might have. Those are three things, as well as the VAT increase, that are direct transfers from the independent school sector to the Exchequer. Although, technically speaking, they may not be the measures that we are discussing today, they very much affect the ability of schools to be able to absorb any of those price increases.

To inform their conclusion on how many children will be displaced in the private sector, the Government have, to an extent, relied on one statistic. They say that the number of private pupils has remained steady, despite a large real increase in average school fees since 2000. Considering price elasticity is a mathematically flawed approach. Up until very recently, we used to talk about 7% of children going to private schools. Now we say that it is 6%, because the proportion has come down. But at a time when pupil numbers have been growing, other things being equal, we would expect the number of children at private schools to have been increasing as the proportion stayed roughly constant.

Moreover, it makes no sense at all to look at gradual price increases over a 10, 20 or 20-plus year timeframe and to say we could conclude anything from that on the effect of an overnight price increase of 15%, 20% or more. The Government have come to the conclusion that we will end up with a long-run steady state of 37,000 fewer pupils in private education in the UK.

[Freddie van Mierlo]

The right hon. Gentleman is right to interrogate the Government’s numbers. Does he share my concern around SEND provision with children returning to state schools and the fact that teaching assistants are not fully paid for in state schools? That will be an additional burden on those schools.

[Damian Hinds]

Of course, there has been a huge increase in the number of teaching assistants over the past 14 years, but the hon. Member is right that there are particular issues for children with special educational needs, which I will come on to.

The Government estimate that there will be 37,000 fewer children in private schools and of those, 35,000 will go to state schools. What happens to the others? Some will be international students who will not come to this country, so that is a loss of export earnings, and some will be home-schooled. The hon. Member for Twickenham (Munira Wilson) mentioned that, and we have not talked about it a great deal, but it is significant. The Government will say, “It’s only 35,000.” That is like a pretty substantially sized football stadium if we picture the number of children whose education will be changed by the measure. They say, “Don’t worry because it is only a small proportion of the total number in state schools.” At the end of the day, the number is from a spreadsheet; there is no guarantee that it will be 35,000 or any other particular number. In fact, it is rather odd that they came up with a single number at all. I would think that in any economic analysis like this we would at least have a range in which there is a central planning assumption, but also a reasonable worst-case scenario.

More importantly, as my right hon. Friend the Member for Hertsmere (Sir Oliver Dowden) mentioned earlier, the effect will not be even. I have lost count of the number of parliamentary questions I have put down trying to get out of the Government where they think those 35,000 children will show up, because there is a huge difference in where they show up. It is worthless having empty places in primary schools in inner London if that is not where the children will be displaced to from private schools. In broad terms, there will not be that much of an impact on state primary schools. There will be on state sixth forms in London, but the big effect will be on individual places, particularly in 11-to-16 education. They include not only in counties we might guess, but also Bristol, Bury, Surrey, Salford and a much longer list besides.

On why the proposed review is so important, and we need to examine this in the post-legislative scrutiny, the Government say the revenue costs will be £270 million a year. That is, in other words, the cost of educating those extra 35,000 in the state sector. They go on to say that they have calculated the number based on the average spend per pupil in England in 2024-25. That is wrong. It is a mistake to base it on the average pupil because we know children with special educational needs will disproportionately have to transfer, and that will have a higher cost to their education.

Moreover, we will get more families—we do not know how many—applying for an EHCP. The limiting case is where a child is in a private school right now and their parents are paying considerably more than the average place. They will find that they cannot afford the extra 20%, so they will apply for an EHCP and the child could get placed back in the same school, with the entire cost now being picked up the state.

Farming and Inheritance Tax

Freddie van Mierlo Excerpts

Wednesday 4th December 2024 Commons Chamber

[Matt Bishop (Forest of Dean) (Lab)]

My constituency is a very rural one with 751 farms. It is an extremely important issue to my constituents and me. I hear their concerns and deeply empathise with their worries and fears. While it is a difficult decision for the Government to introduce an inheritance tax, it is one that is unfortunately necessary. I welcome the opportunity from the Opposition to debate the matter, largely because it allows us the time to discuss the reasons why inheritance tax has to be introduced.

There is a crucial need to understand the unique challenges faced by rural communities and the immense value they add to society. Farmers across the country, and most definitely in my constituency, are not just farmers; they help in a number of different situations, including recently with the floods in the Forest of Dean. They are vital to all of us in the community.

However, the economic turmoil of the past 14 years has left the Government with the difficult task of balancing the needs of the British people with the economic realities of running the country. The failure of the previous Government to secure a Brexit deal that protected the interests of farmers left many in a vulnerable position, struggling with increased costs, trade barriers and uncertainty. This Government’s new deal for farms aims to safeguard farmers’ interests, and we will do all we can to support them.

We are using the Government’s purchasing powers to ensure that 50% of food consumed in hospitals, army bases and prisons is from British farmers, putting more money in their pockets. We are introducing grid reform, allowing farmers to plug their renewable energy into the national grid. We are also seeking a new veterinary agreement with the EU to ensure that our friends on the continent can enjoy the incredible produce that Britain has to offer. This Government are actively working to improve the lives of farmers in a way that will benefit the agricultural sector and the broader economy.

[Freddie van Mierlo (Henley and Thame) (LD)]

Will the hon. Member accept that the changes to inheritance tax damage the economic realities in the UK because farmers will be disincentivised from investing in their land and increasing its productivity?

[Matt Bishop]

Although I empathise with the hon. Member’s comment, that is not exactly what I hear from the farmers in my constituency, which I will get on to shortly.

The impacts of Brexit, including trade barriers, labour shortages and disruptions in supply chains, have undeniably placed significant pressure on our farmers. It is somewhat ironic that the Opposition choose to complain about this Government’s actions when it was their failures that created this mess. The NFU even criticised DEFRA as recently as September for significant underspending amounting to £358 million over the past three years.

My constituents and, more importantly today, farmers in the Forest of Dean have felt the impact of the challenges first hand. Small businesses and families are all facing tough times, and the Opposition must acknowledge the broader context. The new initiatives that the Government are introducing, from the support for British farmers to green energy reforms, are vital steps forward, and I do not underestimate the difficulties that lie ahead for all of us. There is no quick fix for the challenges we face, and I fully recognise the pain and frustration felt by those who are struggling, especially in rural areas such as mine. But the Government’s focus is on long-term growth, sustainability and providing the tools that our farmers need to thrive. It is inaccurate to say, as has been raised, that no farmers agree with this policy; some farmers agree with it. They want better services, and they are happy to accept that reform needs to take place.

Some might be surprised to hear that I agree with the Leader of the Opposition’s recent comments to the media reminding us of the profound impact of the rising cost of living on individuals across the UK and farmers. She is correct that the impact is felt deeply and intensely by all in the country, including my constituents and farmers in the Forest of Dean, but let us not forget one important factor: it was under the previous Conservative Government that the cost of living crisis began for farmers. It is under this Government that it will end.

--- Later in debate ---

[Jon Pearce]

I will not give way at this stage. Those estates over the threshold will have a 50% reduction in the amount they pay. We have already heard that the seven-year rule will continue to apply, so farming families will be able to make plans for the future.

[Freddie van Mierlo]

Will the hon. Gentleman give way?

[Jon Pearce]

Sorry, I will not give way at this stage.

This debate has, however, shone an important light on one issue, which I am grateful to the right hon. Member for Orkney and Shetland (Mr Carmichael) for raising: the fact that our farmers are working day in, day out, for very little profit. The question is how we support them to be profitable again. Energy bills are one of the biggest costs farming businesses face. This Government will help bring down those costs through GB Energy and by introducing grid reform to allow farmers to plug renewables into the national grid. We must protect them from being undercut by foreign imports.