Agricultural Property Relief

Debate between Graham Stringer and Robbie Moore

Tuesday 28th January 2025 Westminster Hall

[Robbie Moore (Keighley and Ilkley) (Con)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I thank the hon. Member for Caerfyrddin (Ann Davies) for securing this incredibly important debate.

Here we are yet again, having summoned yet another Minister to the House. We have slowly worked our way through all the DEFRA Ministers, and now here we are with the Treasury. I welcome the new Treasury Minister to his place; he is replacing the Farming Minister, who seems to have disappeared from these debates. I hope the new Treasury Minister lasts longer in his post than the infamous “Ed Stone”, which he was so proud to have masterminded.

Let us remember why we are here. Last weekend, the NFU’s farming day of unity saw one of the biggest agricultural rallies, which took place in all parts of the United Kingdom, with people from all walks of life coming together to support our farmers. That followed protests outside supermarkets and Westminster, and at auction marts, but still the Government refuse to get behind our farming community and listen. Let them be under no illusion: the strength of feeling outside this place is rightly strong, and the issue will not go away.

When the Government announced this policy, I thought they were just being naive. Then I thought they were perhaps being arrogant. Now the only conclusion I can come to is that this is a vindictive policy aimed at our farming community. That is because the Government are still unwilling to listen to the concerns raised by Members and stakeholders, whether that be the NFU, the CLA or the Tenant Farmers Association. The Chancellor is yet to engage with any of them.

Although the Government will no doubt claim that only affect 27% of farms will be affected, research conducted by those industry experts concludes that at least 75% of commercial family farms will be, because the £1 million threshold will impact the many. This disconnect stems from significant flaws in the Government’s methodology, which fails to account for the many market conditions and economic realities that our farming businesses face.

Given that the average size of a farm is about 200 acres, the average value of a farm holding will without doubt be well in excess of the £1 million threshold. When we take into account the value of the farmland; the farmhouse, and potentially a cottage or two; and any stocks, machinery or growing crops that may be in store, it will exceed the £1 million cap, therefore impacting the farming business. When we take into account the profit that a business may be making—or indeed struggling to make—on an average-sized farm of 200 acres, it is going to struggle to pay that bill.

What do farmers do? What are the options available to them? They can sell assets to pay the inheritance tax bill, or they can sell some of the livestock or some of the machinery, stocks or crops that may be in store, all impacting the productivity of that farming unit. Alternatively, they may want to take out a loan, which is an option suggested by the Government. I do not know whether the Treasury Minister has spoken to any banks, but I have, and none of them is saying that they will offer a loan to pay a tax bill. That is because the gearing of many of our family farming businesses is so highly strung that they could not pay any additional loan that may be granted to them, because the serviceability of that debt, which probably exists alongside the family farming business they already occupy, is so strongly geared.

That is before we take into account all the other budgetary consequences the Government have brought about: the increase in employer’s national insurance contributions, the increase in the minimum wage, the immediate effect of delinked payments, the removal of capital grants, the fertiliser tax that will no doubt be introduced and the double-cab pick-up tax. All impact the profitability and productivity of our many family farming businesses. This policy will also lead to a significant reduction in the land available to rent, given that around two thirds of working farms rent some or all of their land.

That is before we take into account the human cost. Farming can be a very lonely business, and I fear that the added weight of the changes to not only agricultural property relief but business property relief will be forcing some of the older generation, including those who are seriously ill at the moment, to make decisions right now. Indeed, I have spoken to a few. I spoke to one farmer just last week who is aged 78 and in ill health. If he passes away before April 2026, any death tax will be zero. If he passes away after April 2026, the death tax imposed on his family will be over £1 million. What decisions is that individual having to make right now? Those are the consequences of the decisions and choices this Government have made.

Will the Government have the moral courage to pause their actions and consult the industry experts I mentioned, as well as Opposition Members who continue to raise concerns on behalf of their constituents? As the shadow Secretary of State, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), has rightly asked every time she has been at the Dispatch Box, will the Government record farm suicides in the next few months so that we can properly assess the human impact of the choices this Labour Government are making? What measures could be put in place to mitigate the impact of these changes on those who are already over retirement age or in serious ill health? They have held on to these assets for many years and many generations, and they simply want to be in a position to hand them down to the next generation.

I want to ask the Minister a few questions. Why on earth has an economic impact assessment been undertaken of the consequences of the changes to agricultural property relief, and of agricultural property relief dual-claimed with business property relief, but not solely of business property relief? Has any impact assessment been taken into account in the changes to inheritance tax, as well as the wider budgetary changes as a result of the measures I have already alluded to?

Why do the Government believe that it is unnecessary to take into account the size of a family farm when indicating the negative consequences that this proposal will have? If they implement a £1 million threshold, the size of a farm absolutely matters, because that takes into account not only the amount of land being farmed, but the existing productivity and the assets retained within that business. Why is the size of the farms not being taken into account?

If the Government are so determined to push ahead, can they tell us why on earth have they arrived at the £1 million threshold as the appropriate figure? How do they deal with the progressive disappearance of the residence nil rate band on estates valued at more than £2 million? How will they protect tenanted land on estates that will be valued at levels much higher than any threshold? What hope is there for the tenant farmer who is told that their landlord is now having to liquidate the capital value tied up in the land that they rent to satisfy the Government’s potential tax liability? As a result, that tenant farmer will have no tenancy, because the tenancy will have to come to an end. For the tenant farmer, that will mean losing their home, their business and their livelihood. No amount of tax planning will help those tenant farmers to find a way forward.

In setting out the £1 million threshold, the Chancellor of the Exchequer claimed that she wanted to protect hard-working family farmers. I can tell the Minister that all family farmers are hard-working, so why on earth was the threshold set at that level? On behalf of the tenant farming sector, I can say that whatever level is set, it will do nothing to protect our tenant farmers. They will be impacted by the collateral damage caused by the decisions their landlord will have to make.

Just this week, the noble Lord Mackinlay of Richborough received an answer to a written parliamentary question in the other place that stated that agricultural property relief and business property relief on assets tied up in private pension funds will not receive any of the reliefs that Ministers are citing. As the Pensions Minister, can the Minister confirm that and explain why the Government have further excluded farms held under those types of ownership from this calculation? Given the Government’s response in the other place, they will absolutely be impacted.

There is much more to do. As we have indicated, the Conservatives will reverse this disastrous family farm tax, which will impact hard-working family farms. The Opposition position is clear: this policy is bad for farming businesses, bad for rural economic growth, bad for food prices and bad for food security. Farmers can see it, the NFU can see it, the CLA can see it, the Tenant Farmers Association can see it and the Central Association of Agricultural Valuers—of which I must declare I am a fellow, Mr Stringer—can see it. The supermarkets can see it, the Opposition can see it and the hon. Member for Montgomeryshire and Glyndŵr (Steve Witherden)—the one lonely Labour MP sitting on the Government Benches—can see it, so why on earth can the Government not see it?

[Graham Stringer (in the Chair)]

Minister, we have a generous amount of time left. Can you try to ensure that you leave at least two minutes for a winding-up speech?

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[Robbie Moore]

You are not listening to the question.

[Graham Stringer (in the Chair)]

Order.