Farming and Inheritance Tax

Geoffrey Clifton-Brown Excerpts

Wednesday 4th December 2024 Commons Chamber

[James Murray]

My hon. Friend is absolutely right to highlight the decimation of businesses during the Conservatives’ time in office. Businesses across the economy need stability, public finances on a firm footing and investment in our public services. That is what businesses across the country need to invest for the future and grow.

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

I am very grateful to the hon. Gentleman for giving way. He is a Treasury Minister. May I suggest that some of the disparity between the Treasury figures and those of other reputable bodies representing agricultural interests is because of land values? Average values for ordinary land in the Cotswolds are now £15,000 an acre. Will he accede to the request of my right hon. Friend the Member for Salisbury (John Glen), a former Chief Secretary to the Treasury, and publish an up-to-date impact assessment on how many farms this tax will affect?

[James Murray]

A lot of data has already been published. I mentioned the Chancellor’s letter to the Treasury Committee, and further details on the impact will be published alongside the draft legislation in the normal way. I suggest that the hon. Gentleman reads the letter to the Select Committee. As he and the his right hon. Friend will know, the impacts are typically published at the time of draft legislation. That is the normal process. Indeed, it was the norm under the previous Government.

--- Later in debate ---

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

I declare my interest as a working farmer and a chartered surveyor.

When I drive through my constituency, I am always reminded that farmers are the most underrated and essential workers in the rural Cotswolds and many other rural areas. Many have worked the land for generations, and I think in particular of my constituent, Nigel—I will avoid his surname to avoid press intrusion—who is still farming at the age of 93. This Government forget that farming is not a hobby. It is farmers who wake up at the crack of dawn to ensure that the rest of the population have food on their table, who clear the roads when trees fall on them or they are blocked by snow, and who plant trees and wild flowers to ensure that our biodiversity is protected for future generations. The hard-working farming community was dealt a massive blow by this Labour Government’s Budget in October. As my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins) on the Front Bench says, this is about not only the IHT changes, but the national insurance contributions, the change in minimum wage, the tax on fertiliser and an up to 211% tax hike for double cab pick-ups. All those extra costs take money out of a business.

I know that the Chancellor and the Prime Minister have both stated from the Dispatch Box that the IHT changes will not affect the vast majority of farms, and the Treasury has forecast that only 27% of all farms will be affected. However, as the Minister for Food Security and Rural Affairs knows, DEFRA’s own forecasts suggest that two thirds of farms will be affected by this destructive policy, and the National Farmers Union has recently published an analysis of the 27% figure, which found that it

“materially underestimated the true proportion”,

with around 75% of commercial farms to be affected. That is due to the Treasury using figures that are based on the 2021-22 agricultural property relief data, which is not representative of the current situation.

[Andy MacNae (Rossendale and Darwen) (Lab)]

Will the hon. Gentleman give way?

[Sir Geoffrey Clifton-Brown]

We have already had an exchange in interventions, so I ask the hon. Gentleman to first let me say this about land prices. I disagree with the point about land prices being inflated. We cannot buck the market. It is not the policies that inflate land prices; it is people coming in from outside agriculture who are putting up the prices.

[Andy MacNae]

The NFU said that farms may be affected by the policy—that is the language that it used—taking no account of estate planning or any other mitigations that people might use. As the Secretary of State said, people take action in the event of change. The NFU has ignored that in quoting its statistics.

[Sir Geoffrey Clifton-Brown]

If the hon. Gentleman will just listen to my speech and the examples that I am about to give with an open mind, he might change his mind.

The Treasury does not include in its figures the impact of business property relief claims; that also fits under the same £1 million ceiling. According to the NFU, 40% of farmers also claim BPR on machinery and livestock, which makes the £1 million ceiling even more restrictive. As shown in an earlier exchange, the Government have failed to complete a proper impact assessment of the changes to APR and BPR on the rural economy. The hon. Member for Rossendale and Darwen (Andy MacNae) might be interested to hear that the CLA modelling has shown that the changes will lead to 5% of rural businesses closing, with up to 190,000 jobs lost from the rural economy, some in very remote areas, and it will be difficult to replace them.

[Jon Pearce (High Peak) (Lab)]

Will the hon. Gentleman give way?

[Sir Geoffrey Clifton-Brown]

I do not want to give way to too many people, but I will to the hon. Gentleman.

[Jon Pearce]

The hon. Gentleman mentions 5% of agricultural businesses being at risk. Is it not true that under the last Government, between 2019 and 2024, there was an 8% reduction in agricultural businesses in his constituency of North Cotswolds, thanks to the policies of his party when they were in government?

[Sir Geoffrey Clifton-Brown]

That was over a much longer period, but these changes will take effect much quicker. I can assure the hon. Gentleman that once the tax starts to bite, those jobs will be lost quite quickly. To put that into perspective, the OBR has predicted that only £590 million a year is due to be raised from this destructive policy. This Budget gave the Department for Work and Pensions a whopping £275.8 billion a year. The revenue raised from this tax would be a mere 0.2% of that total amount.

Over the past few weeks, I have had countless emails from worried farmers about their future, and I was lucky enough to meet some of them when they came up to London to protest recently. They varied in age from their late 20s to their early 90s, and it was a valuable meeting. Many had never protested in their lives, but they have chosen to use their voices now when their livelihoods are under threat. Again, to avoid press intrusion, I want to cite the case of David and his younger son, whose farm in the North Cotswolds has 265 acres, a suckler herd of 200 and a small flock of pedigree poll Dorset sheep. They have a range of modern and traditional buildings and have already diversified those. When they include their house, they estimate that their business is worth £5.5 million. David would be entitled to about £1.5 million in relief, and after the 50% relief from inheritance tax, with an effective rate that the Exchequer Secretary went through, that would leave him with a taxable amount of £800,000 on his death. The Minister might like to listen to this: that farmer only earns in total, on average, about £40,000 a year. How on earth is he expected to pay the tax and live on that £40,000? He will not. The farmer will have to sell up and the farm will not be available to future generations.

[Pete Wishart]

Will the hon. Gentleman give way?

[Sir Geoffrey Clifton-Brown]

It is the last time.

[Pete Wishart]

Would the Tories not have a lot more credibility on this issue if they owned up to the disaster that was Brexit? It opened us up to cheap imports, increased costs for farmers and put up barriers and obstacles to trading. Would they not have much more credibility in attacking the Government on this if they admitted that that was an absolute disaster for farming communities?

[Sir Geoffrey Clifton-Brown]

If the hon. Gentleman wants to call an Adjournment debate on Brexit, he is entitled to do so.

I was talking about the serious issue of how this farmer and many others up and down the country will be able to afford the tax—they will not. I understand that the Government have suggested that farmers should be forward-planning and gifting their farms to their children now, which would mean that they could avoid the tax in future. However, for many farmers, that is not an option.

I will take another constituent of mine, who farms near Fosse Way. He is still working on his farm at 93. He did not retire at 65 like many of us, but has kept working the long, hard days, as he did during the second world war, to ensure that we have enough food on our table. He has spent years planning to ensure that his grandchildren could inherit and take over the farming business. Instead, under this Government, his plan has gone completely out of the window, because he will have to live until he is 101 if he is to avoid the tax altogether.

The only option facing many farmers across the country is to sell off their land and stop farming. Those farmers have worked the land for generations. Their children will have seen their parents take over and will have expected to take over when they can, but now face a future of uncertainty. The Government fail to answer the question of what kind of person will buy the land when it goes on the market. It will not be the ones who have farmed the land all their lives. It will likely be foreign investors and hedge fund managers. They will not have generations of knowledge of how to work the land and will likely take prime arable land out of production, as they could possibly make more money from alternatives.

When I worked on the previous Public Accounts Committee—I urge the Minister to listen and to pledge that he will do this—I managed to obtain a commitment from the last Government that the food security index would be published in Parliament every year. Will the Minister give that pledge so we can continue doing that? That way we can see what effect the tax, the selling off of farms and taking land out of production is having and whether our food production is dropping.

I end with a plea to the Government to go back to the drawing board. I understand that a technical tax consultation on the changes is due to be published early in 2025. I urge the Government to use this time to talk to farmers and professionals across the country and find a way that will ensure that farmers such as Nigel do not lose their life’s work to the taxman. Some obvious alleviations and changes to APR and BPR would be to raise the threshold, so that more smaller farm owners and rental farmers would be exempt, and to have a longer transitioning period. That will help farmers like 93-year-old Nigel. However, the best outcome would be to reverse the policy altogether. Farming is under threat. I do not want to see the fabric of our countryside destroyed for future generations.

[Several hon. Members rose—]