Inheritance Tax Relief: Farms

Graham Stuart Excerpts

Monday 10th February 2025 Westminster Hall

[Ben Goldsborough (South Norfolk) (Lab)]

I beg to move,

That this House has considered e-petition 700138 relating to Inheritance Tax relief for working farms.

It is a pleasure to serve under your chairship, Sir Edward. To date, the petition in question has received just shy of 150,000 signatures, which is a mark of the strength of feeling that exists about the proposed policy change. The petitioners argue that

“changing inheritance tax relief for agricultural land will devastate farms nationwide, forcing families to sell land and assets just to stay on their property.”

I put on the record my thanks to the diligent staff of the Petitions Committee who have secured for me, as a representative of the petitioners, meetings with the National Farmers Union, the Country Land and Business Association, the Tax Policy Associates, the Institute for Fiscal Studies and the Rural Accountancy Group. As the Member of Parliament for the rural constituency of South Norfolk, which is formed of a patchwork quilt of farms, I am honoured to lead this debate and, in doing so, to give a voice to the farmers in my constituency who have contacted me to share their thoughts about the planned changes to inheritance tax on agricultural businesses.

[Graham Stuart (Beverley and Holderness) (Con)]

In 2012, my right hon. Friend the Member for Goole and Pocklington (David Davis) and I opposed the then Chancellor’s proposal to impose VAT on static caravans, as it was clearly wrong when we looked into it. Will the hon. Gentleman do the right thing, represent his rural constituents and recognise that this ruinous policy will not only destroy family farms across the country but put up food prices and worsen our national energy security? He should do the right thing, challenge his Chancellor and take some of his colleagues with him.

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[Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to participate in this debate, but I have a sense of déjà vu: a month ago, I stood in my place, the Minister sat in his, and we hoped that the Government would listen. They did not listen. I suppose that we should try to be optimistic. That time, apart from the Minister’s aide, there was not a single Labour MP to be found, but they are all here today. Their approaches have varied. I do not mean to rude to the hon. Member for South Norfolk (Ben Goldsborough), but in nearly 20 years in Parliament, I have never heard a speech that expressed no opinion on the subject in hand. He gets the vanilla award.

The hon. Member for Bishop Auckland (Sam Rushworth) was perhaps tentative and timid, but none the less wanted to hint that it was possible that the perfect selection of policies put forward by Labour might need a little tweak—congratulations on that. However, the award should go to the hon. Member for North Northumberland (David Smith), who was pretty clear that he does not think this policy is right and that it needs to be changed. Praise the Lord that someone on the Government Benches was prepared to come out and say so! That is what they were sent here for—not to do whatever the Prime Minister tells them to.

As I mentioned earlier, when the 2012 Budget proposed the caravan tax, which would have devastated the industry in East Yorkshire—it happens to be based there—and down the coast, because that is where caravans are deployed, we stood against it and opposed it.

[Sam Rushworth]

Will the right hon. Member give way?

[Graham Stuart]

I am delighted to see that the hon. Gentleman is going to stand up and find his inner rebel.

[Sam Rushworth]

There is absolutely nothing timid about what I am telling the right hon. Gentleman: farmers in my community were massively let down by the previous Government.

[Sam Rushworth]

I do not know why the right hon. Lady keeps saying that. We have not voted on the policy yet. There was a vote against a motion that was put forward by the Opposition. It was a cynical motion that was designed to make us want to vote against it, because it was so ridiculous.

[Graham Stuart]

I am afraid that the hon. Gentleman shrunk inside his shell, and the farmers in his constituency will have heard that.

It is possible to challenge one’s Government. I said to my Whips then that the best service we could do the Government was to prevent them from doing something stupid, harmful and alienating to voters. I hope that Government Members can see that, because the Opposition cannot change this. People outside say to me, “Can we get this changed?” It is actually up to Labour MPs. They have the majority. Democracy is not about having a majority and doing what one likes. Democracy is about listening and doing what the now Prime Minister told the NFU when he said:

“You deserve a Government that listens, that heeds early warnings”.

There are one or two warnings about. Listen, change: if the Government change, four years on, no one will remember the U-turn. Whatever civil servants say—they are always very keen to stick with a policy—if it is wrong, stop doing it. And this is wrong. In the minute and 20 seconds I have left, let me say why it is so wrong. We have touched on the various elements, but I am not sure we have pulled it all together.

We have a really peculiar group of businesspeople in this country; they are called farmers. They take a return on capital—the millions they have invested in their farms—that is typically less than 1%. There is nobody that I am aware of—no business I was ever involved in—that would remotely consider continuing in an industry that paid less than 1%. These farmers take a pittance and get up at 4 o’clock in the morning for the privilege. They look after the animals and it does not matter if they are ill; they cannot carry their employment rights and go, “I’m not well, I shouldn’t have to go out,” because the cows do not care: they have to go out and look after them, and then they get less than 1% return. Those farmers, the most beneficent public-minded businesspeople in the whole country, then provide excellent food at among the lowest prices in Europe. If ever there were a business that we would not want to go and mess with, it is these—I should not say it, because I will make enemies of them.

[David Smith]

I thank the hon. Member for his scoring system, but can he confirm whether he was part of the last Government, which failed to get £300 million of subsidies to farmers out the door?

[Graham Stuart]

For the hon. Gentleman’s political career, as he has been so brave today, I entirely forgive him that piece of whataboutery.

We must understand how remarkable it is that there is a whole group of businesspeople who take practically nothing from their business, work all the hours God gives, and provide us with some of the finest food in the world at among the lowest prices in Europe. Why would we want to mess with that? Not only do they do that, but they brainwash their children from the earliest age so that they carry on doing it. These people are in indentured service to the nation, providing food while making very little profit. They do it willingly and, in fact, love it: it is their life. To go and mess with them out of some stupid, socialist spite is ridiculous and absurd, and Government Members know that—the hon. Member for North Northumberland certainly does, and he should lead his colleagues to tell the Chancellor to change course, just as we did in 2012 when George Osborne got it wrong.

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[Gideon Amos (Taunton and Wellington) (LD)]

It is a pleasure to serve with you in the Chair, Dr Murrison.

I rise to speak up for the 337 signatories to this petition from my Taunton and Wellington constituency. One thing that we should have learned—surely, I hope, the Treasury must have done—is that farms are asset-rich but cash-poor, and that especially applies to smaller family farms. The Treasury’s figure that only 27% of farms will be affected is therefore an underestimate. As the NFU has pointed out, it is more like 75%, because Government figures often leave out the fact that changes are being made to both business property relief and agricultural property relief. That means that more farms will experience an impact, since the maximum allowance applies to both combined.

More importantly, this measure fundamentally misunderstands that the value of a farm is wrapped up in the land and is about not just pounds and pence, but the integrity of that farm. If one starts selling off chunks of that farm piecemeal, time after time, one eliminates the value of that farm as a whole. The Government need to accept the damage that this family farm tax could do.

The Minister might say, “The money can be borrowed—why do they not just borrow the money and pay it off over time?” Ed Hawkins from Cutsey farm in Trull came to see me and explained that if he annualised that payment over a number of years, it would wipe out the very small margin that he depends on to live. We have heard the same thing from other Members. It is not realistic. Robbie Vile from Higher Lillesdon farm in North Curry came to see me with his son, Charlie, who is hoping to go into farming. However, looking at how farming has been treated recently—the delays in the SFI payments, the underspend of a full £358 million of the agricultural budget over the last three years, massive advantage given to Australia and New Zealand, cheap imports after Brexit and now inheritance tax—they ask: why would any young person be encouraged to go into farming in those circumstances?

[Graham Stuart]

Does the hon. Gentleman agree that it would be useful for the Minister to say from the Treasury Front Bench what the average profitability is in British farming? It would be useful to have that on the record, because it is in that context that we have to look at this. If we do not see it in context, we just compare farming with other businesses and can easily mislead ourselves as to the reality for farmers across the country.

[Gideon Amos]

I agree; that would be a very useful statistic. If the Minister is not willing to look it up, I hope he might ask the House of Commons Library to do so, because it would certainly reveal the vast number of farms that would be affected by the scale of the tax that is proposed for them.

In short, I have no objection to the taxing of super-large landowners who use farms as a loophole to avoid inheritance tax—in fact, I would support it. But the irony of this policy is that it will drive more land into the hands of those super-large landowners, because every time farmers have to sell off some of their land, it will go to one of those bigger companies. Seeing that land being sold piecemeal time after time will only damage British farming as a whole. Drawing this tax down to some of the smallest family farms in Taunton and Wellington, and across the country, is unjust. It will not raise the money that the Government say it will. It will mean piecemeal disposal of farms up and down the country. The Government really must raise the threshold for this policy or extend the transitional relief. If they do not do that, the policy needs to go and it needs to go now. That is what the Liberal Democrats would do.

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

It is a pleasure to serve under your chairmanship, Dr Murrison. Here we are again! As we speak, thousands of farmers are once again rallying outside the gates of this building. Over the past six months, our farmers have repeatedly been told by this Labour Government that their way of life is expendable and that their hard work, their sacrifice and their future can simply be priced up and taken away. Is it any wonder that our farmers have shown up in such vast numbers again today?

Make no mistake: it is not just our farmers who are outside our gates. Across the country, more than 148,000 people have signed the petition because they know, just as Opposition Members do, that the family farm tax is wrong, is vindictive and must be scrapped now. I thank the hon. Member for South Norfolk (Ben Goldsborough) for leading this petitions debate, but I have to say that he did a disservice to the petitioners, who put their faith in him to lead this debate, by not actually forming an opinion. He communicated strong arguments, but he did not form an opinion. He was a mere spokesman and did not use his opportunity in this debate to voice properly their concerns.

What an image for our farming community to take away from this debate! Where on earth is the Secretary of State for Environment, Food and Rural Affairs? The shadow Secretary of State, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), is sitting beside me. Where on earth is the farming Minister? He is absent. What message does it send that the Labour party has filled up its Benches but that only five Labour Members spoke, despite having the opportunity to voice their concerns in this three-hour petitions debate, and that all five of them voted against scrapping the family farm tax when we brought the motion to the House? This is probably one of the most important debates we could have on this issue, and yet once again those with responsibility for rural areas and our farmers are missing in action. There are Labour Members who have turned up but have not even contributed to the debate, despite representing large rural constituencies.

Where is this Government, who claim to be on the side of rural Britain? If they had actually visited some of their farming communities, they would know just how damaging to our farming community their choice to implement the family farm tax is. They might have had some of the devastating conversations that I and many Conservative Members, including the shadow Secretary of State, have had. I would like to share some of them.

Just last week, in Northamptonshire, I met George, who has worked on his farm all his life and is nearly in his 80s. Unfortunately, he is extremely ill. He knows from his diagnosis that he does not have long to live, but he is not sure whether he will live beyond 26 April. He knows that if he should pass away before 26 April, his IHT bill will be zero, but if he passes away after 26 April, the tax bill for his family will be well over £1 million—a debt that his family simply cannot sustain. Taking his own life was an option that was put forward to me. These are horrific choices and unthinkable amounts of pressure for any individual or family to be put under, never mind some of the most vulnerable people in our society.

[Graham Stuart]

My hon. Friend is giving a very powerful speech. It is true that George was given no notice and no ability to plan for this important impact on his life and on everything he has worked for—but is it not worse than that, because he explicitly relied on a promise not to do this? That makes it particularly unforgivable.

[Robbie Moore]

I could not agree more.

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[James Murray]

I will respond fully to the point made by the hon. Member for Angus and Perthshire Glens (Dave Doogan) first. As I was saying before he intervened, the data from HMRC, to which other Members have referred, shows that 40% of agricultural property relief benefits the top 7% of estates. It is a similar picture for business property relief, more than 50% of which is claimed by just 4% of estates—that equates to 158 estates claiming £558 million in tax relief. Given the wider pressures on the public finances, we do not believe that that is fair or sustainable, and we felt it was appropriate to reform how the reliefs operate.

[Graham Stuart]

To follow up on the earlier question that I channelled in the Minister’s direction, will he say something about the average profitability of family farms? That puts this in context.

[James Murray]

Earlier in the debate, we heard that the average return on capital is 0.5%, but I am sure that the right hon. Gentleman will be aware that 10% of farms in England have made a return on capital of 10%, so it is perhaps a more complicated picture than the one presented earlier. Similarly, farm business income, which is net profit, shows a wide variation. In designing the reforms, we obviously considered the fact that those who have assets on which they currently claim agricultural or business property relief still need to have generous relief. That is inherent in the design of the reforms that we are proposing: there is full 100% relief for the first £1 million of assets—above other nil-rate bands, spousal transfers and so on—and then effectively an unlimited 50% relief thereafter.

[Graham Stuart]

I thank the Minister for his answer and for telling us about the variation, which I am sure is there, but will he provide the average or median, to give us a sense of the situation for the vast bulk, rather than the top 10%? What does the average or median look like? What is the reality for most farms up and down this country?

[James Murray]

I thank the right hon. Gentleman for his further intervention. In understanding how the reliefs are reformed, the important point is to focus our conclusions on the data on claims. In understanding how many estates are likely to be affected by the changes, the data that matters is the data on claims. That is why the information that I was setting out around where the bulk of the relief currently goes is based on claims data. In a moment I will come to some other statistics that were referred to in the debate.