Inheritance Tax Relief: Farms

Helen Morgan Excerpts

Monday 10th February 2025 Westminster Hall

[Helen Morgan (North Shropshire) (LD)]

It is a pleasure to serve with you in the Chair, Dr Murrison. I thank the hon. Member for South Norfolk (Ben Goldsborough) for opening the debate. It is the first time that North Shropshire has been in the top 10 constituencies in a petition—713 people have signed, which is not surprising when we consider that there are over 1,000 farms in the constituency, covering 62,000 hectares. It is one of the 20 most rural constituencies in the country. Producing food for the country is our main activity, not just through farming and the thousands of people who support those farms. Food production, storage and distribution are all major industries as well.

Farmers have had a tough time: incomes are historically low and farmers can ill-afford to pay inheritance tax when an estate sadly passes on. The Government estimate that 288 farms will be affected in North Shropshire. Even if that is not an underestimate, which we strongly suspect it is, that is a whopping 27% of the farms in my constituency—more than a quarter—that will have to sell off land rather than further invest in the rural economy. That is shocking.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

This policy could force hundreds of family farmers in my constituency to sell their productive land. Does my hon. Friend agree that as well as causing uncertainty to tenant farmers, the policy undermines our ability to address the threat to food security, without discouraging those who land bank for tax purposes?

[Helen Morgan]

I agree with my hon. Friend, and will come on to that point in a moment.

I want to mention Robert, whose family has farmed a traditional mixed dairy and arable farm near Oswestry for 120 years. Their farm is valued at £6 million, which sounds like a lot, but their income is only £60,000 a year. Even if the £3 million dual relief that we have been told about by the Treasury applied, paying it off would wipe out their income for 10 years. In fact, they estimate their liability would be higher than that. It is not just traditional farms that are affected: rental businesses, nurseries, and horticultural businesses all fear that they cannot pass on their business at the time of death as a result of this ill-thought-through policy.

The Chancellor wanted to put wealthy non-farmers off buying land to avoid inheritance tax, but I reckon being charged 20% with 10 years to pay it off is a pretty attractive alternative to paying 40% now. With such a low threshold of £1 million, many small farmers will be left with a liability they simply cannot afford to pay because land does not translate to cash unless they sell it.

This tax does not achieve its mission at all. The idea that farms can survive it is not true. Years of being taken for granted by the Conservatives have left farms in a desperate state. Some 8,000 farms shut their doors last year—one in 25—and farm incomes have been dropping year on year. That is down to a number of factors, including soaring inflation, which is beyond the Government’s control, and the botched implementation of the sustainable farming incentive, which was not. The disastrous trade deals with Australia and New Zealand, and the comprehensive and progressive agreement for trans-Pacific partnership have set an alarming precedent, especially while the President of the United States is holding anyone who does not give him what he wants to ransom with trade tariffs.

The Government must protect the farming budget. We need our family farms to thrive: for economic growth, which is so crucial in rural areas; to produce our food; and to protect our environment. There is still time to reverse this disastrous decision. I urge the Government to listen to the valid concerns and to demonstrate their commitment to rural Britain. Let us axe this family farm tax.

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[Sarah Dyke]

I thank the hon. Gentleman for making that point. Indeed, a recent survey shows that 95% of young farmers under 40 see mental health as their biggest concern. It is so significant.

I agree with farmers in Glastonbury and Somerton who feel that the thresholds have been set far too low. Some of them have told me that the figures that the Government have arrived at are just plain insulting. Many farms have a land value that is way in excess of any returns that can be earned on their land. As we have heard, farmers are capital-rich but asset-poor.

A dairy farm near Broughton has been a family farm for five generations and more than 100 years. The farmers there have told me that they already struggle to make a living as it is, without having to face the prospect of thousands of pounds each year being eked away from their business when they pass away. Their son wants to come into the farming business, but the proposed changes will destroy his chances of success. The changes will destroy everything that that family has worked so hard for throughout their lives, trying to secure the business for the next generation.

What is so galling is that the family farm tax fails to address the key issue of land being snapped up by wealthy individuals as a tax haven. Like others, I am desperately concerned about the actual number of farmers who will be impacted by the IHT changes. The Government resolutely refer to a figure of only 500. In my view, however, one farm is one farm too many. My point is: where has this figure of 500 come from? The Government claim that it is from the OBR, but the OBR says that is not the case. If it is not, perhaps the Minister can confirm today where this figure has originated from, and how.

[Helen Morgan]

My hon. Friend is doing an excellent job of summing up the debate. Lots of residential houses in rural areas such as mine have a couple of acres at the back, which people might use for hobby farming. They are not commercially viable farms. Does she agree that if the Treasury have taken those into account, it will have grossly underestimated the impact of this change?

[Sarah Dyke]

My hon. Friend is absolutely right. Many in the industry feel that that figure is a vast underestimate, with inflation likely to bring yet more farms over the threshold within the next generation.

I hope that the Government will look again at their modelling to see how they can protect family farms and target those who use agricultural land to avoid paying tax. The Liberal Democrats urge the Government to reconsider and raise revenue for public services more fairly by reversing the Conservatives’ tax cuts for big banks, increasing the remote gaming duty on online gambling profits and raising the digital service tax on social media companies and tech giants. We urge the Government to support British farming by investing £1 billion annually in profitable, sustainable and nature-friendly farming; reducing trade barriers with Europe, including with a comprehensive veterinary agreement; and strengthening the Groceries Code Adjudicator to protect consumers and farmers from unfair price rises while supporting our producers.

The food security of the nation is imperative to national security, but I fear that these latest measures may have a negative impact on it. It is deeply disappointing that after years of the Conservatives taking rural communities for granted, we now see more of the same from this Government. I urge the Minister to rethink his attitude to farming and rural communities. My colleagues and I on the Liberal Democrat Benches will be fighting tooth and nail to make sure that no family farm receives a hammer blow to their business from these changes. I echo my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) in urging the Minister to please pause and reconsider.

Oral Answers to Questions

Helen Morgan Excerpts

Tuesday 21st January 2025 Commons Chamber

[Helen Morgan (North Shropshire) (LD)]

5. What fiscal steps she is taking to help increase levels of economic growth in rural areas.

[Dr Allison Gardner (Stoke-on-Trent South) (Lab)]

6. What steps she is taking to help increase economic growth in Stoke-on-Trent.

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[The Chancellor of the Exchequer (Rachel Reeves)]

The Government are better targeting these reliefs to make them fairer. The latest figures for 2021-22 show that the top 7% of claims are counted for 40% of the total value of agricultural property relief.

[Helen Morgan]

The Chancellor will know that one of the biggest factors holding back the rural economy is poor public transport. When I visited the jobcentre in Oswestry last year, I was told that one of the biggest impediments to people finding a job is that they cannot get away from where they live because of poor public transport. Can she update me on the discussions that she has had with her colleagues in the Department for Transport over reinstating projects such as the Oswestry to Gobowen railway line and step-free access at Whitchurch railway station?

[Rachel Reeves]

At the Budget, we introduced sustainable transport settlements, with £650 million of funding for local transport, and confirmed an extension of the UK shared prosperity fund, providing £900 million to local authorities to invest in local growth. We also announced money in the Budget for some trailblazer projects to help those furthest from the labour market back into work. On the specific issues around transport in her constituency, I am very happy to set up a meeting for her with the relevant Minister.

Oral Answers to Questions

Helen Morgan Excerpts

Tuesday 3rd December 2024 Commons Chamber

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

8. What fiscal steps she is taking to increase economic growth in rural areas.

[Helen Morgan (North Shropshire) (LD)]

20. What fiscal steps she is taking to increase economic growth in rural areas.

[The Exchequer Secretary to the Treasury (James Murray)]

A prosperous rural economy will be underpinned by improvements in rural connectivity and productivity, the availability of affordable energy, access to public services and a thriving farming sector. To that end, the Government are investing £5 billion in broadband connectivity, which will support growth in rural areas across the UK. In addition, we are spending £5 billion for the farming budget in England over the next two years, including the largest amount to be directed at sustainable food production and nature’s recovery in our country’s history.

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[James Murray]

The Chief Secretary to the Treasury will set out any fiscal measures in due course. I am not sure whether I will get away with committing him to a visit to the hon. Gentleman’s constituency, but I am sure that many of us would like to visit it. In fact, I shall be in Scotland in the next few days, but as it is for a Labour party fundraiser, the hon. Gentleman may not want to join me.

[Helen Morgan]

Rural North Shropshire is home to some great independent businesses that we are looking forward to celebrating on Small Business Saturday this week, but they are held back by the business rates system, which benefits big online retailers and holds back investment not only on the high street but in the countryside. Will the Minister consider a much more radical reform of business rates which takes account of land values, encourages businesses to invest and puts high street retailers on a level playing field with online giants?

[James Murray]

Until the hon. Lady’s last sentence, I thought she was declaring support for our business rates plans, because we are setting out to level the playing field for high street businesses and the online giants. We are doing that by way of a permanent tax cut for retail, hospitality and leisure businesses on the high street, which is paid for by the higher multiplier for those with a rateable value of £500,000 or more—a category that includes the warehouses used by online companies. I look forward to the hon. Lady perhaps contributing towards our “Transforming Business Rates” paper, which sets out our wider ambitions for reform.

Oral Answers to Questions

Helen Morgan Excerpts

Tuesday 3rd September 2024 Commons Chamber

[Tulip Siddiq]

I think I thank the right hon. Gentleman for his question, but may I point out gently to him that, had our economy grown at the average rate of other OECD economies over the last 13 years, it would have been £140 billion larger? I also point out that under the Conservatives the tax burden rose to its highest level for 70 years. I will take no lessons from the Conservative party, because the last Government oversaw the biggest drop in household real disposable incomes since records began.

[Helen Morgan (North Shropshire) (LD)]

5. What fiscal steps she is taking to support pensioners with the cost of living.

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[The Chancellor of the Exchequer (Rachel Reeves)]

This Government support the triple lock. As a result, the state pension is worth £900 more than it was this time last year. In April, it will go up again by the highest of inflation, average wage growth or 2.5%. Our commitment to the triple lock is for not just one year but the duration of this Parliament. In addition, pensioners will continue to benefit from free eye tests, free prescriptions and free bus passes, and those pensioners most in need will continue to receive winter fuel payments alongside the pension credit.

[Helen Morgan]

I thank the Chancellor for her answer, but nearly 22,000 pensioners in North Shropshire are forecast to lose their winter fuel payments very soon, just as energy prices for the average household are about to go up by 10%. Many of my pensioners live in bungalows and older housing stock, which is expensive to heat. A lot of them have been in touch with me to say that they are worried sick about this winter. We know the Chancellor has difficult choices to make, and we accept that, but will she consider that the broadest shoulders are not those of pensioners who earn less than the minimum wage and are about to lose this vital support?

[Rachel Reeves]

I understand the concerns that the hon. Lady sets out. The state pension is worth £900 more than it was a year ago and energy bills are lower this winter than they were last winter. As she points out, we inherited a £22 billion black hole from the previous Government, who had made unfunded spending commitments with no idea how to pay for them. When I became Chancellor, I undertook an immediate audit of the spending situation to understand the scale of the challenge, and I made difficult decisions—some very difficult decisions—to put the public finances on a sustainable footing. They were tough decisions, but they were the right decisions in the circumstances we faced. They included the decision to make the winter fuel payment better targeted, so pensioners who need it most will still get it alongside pension credit. Targeting the winter fuel payment will save around £1.5 billion a year to support public finances.

Oral Answers to Questions

Helen Morgan Excerpts

Tuesday 7th May 2024 Commons Chamber

[Gareth Davies]

My right hon. Friend is right that in the autumn statement the Government extended retail, hospitality and leisure relief in England, essentially to cut tax for 230,000 businesses—a tax cut worth £2.5 billion. The Barnett formula allows the Welsh Labour Government to offer similar relief to Welsh businesses, and it is disappointing, if not surprising, that they have chosen not to.

[Helen Morgan (North Shropshire) (LD)]

On Friday, I visited the K C Jones Motor Repairs garage, a medium-sized business of very long standing in Oswestry in North Shropshire. One of the many challenges that it faces, alongside astronomical energy bills and a shortage of skilled labour, is the business rates that it needs to pay because it must have a high street presence in order for people to take their cars there. Will the Minister consider fundamental reform of business rates so that businesses that need a high street presence can continue to exist? At the moment, they are under huge pressure.

[Gareth Davies]

As I was saying, we have a 75% relief for most high street businesses. I encourage the hon. Lady to look at the package as a whole. We have increased the VAT threshold, bringing 28,000 businesses like the one she describes out of paying any VAT at all, on top of a range of other measures.

HMRC Self-Assessment Helpline

Helen Morgan Excerpts

Wednesday 20th March 2024 Commons Chamber

[Nigel Huddleston]

I thank my hon. Friend for raising this matter. I reiterate that there is a very good reason why HMRC’s structure and relationship with Government is as it is, because it would be inappropriate for Ministers to interfere with individual tax affairs. However, I would be more than happy to raise his point with HMRC and respectfully ask that it pays it due attention. Of course, the Government set broader policy.

[Helen Morgan (North Shropshire) (LD)]

As a former financial controller of a small business in a rural place, I have used those helplines extensively, not least in sorting out disputes when HMRC has got its data wrong. Given that our own experience is that the website’s process is byzantine, that the waits on the phone lines are inordinately long, and that £36 billion of tax goes uncollected by HMRC every year, how can anyone have any confidence that the Treasury is working effectively?

[Nigel Huddleston]

Very simply, we have one of the lowest tax gaps reported in the world, at about 4.8%, precisely because of the clarity of the tax system and the efficiency of HMRC in gaining the tax that is owed. Of course there are customer service challenges, and I am having conversations with HMRC about that. HMRC is also held to account in the Chamber, the Treasury Select Committee and elsewhere, as appropriate. It is important that we recognise that HMRC received 38 million telephone calls and 16 million pieces of correspondence in 2022-23. If it were a private sector business, we can see how it would make sense strategically to move, where appropriate, as much of that activity as possible online, where it can be dealt with more appropriately and often more quickly.

Oral Answers to Questions

Helen Morgan Excerpts

Tuesday 19th March 2024 Commons Chamber

[Gareth Davies]

We of course support hairdressers, our high streets and women-run businesses, which is why we have extended the retail, hospitality and leisure relief to 75%. Cutting taxes for hard-working people is what the Conservative Government do.

[Helen Morgan (North Shropshire) (LD)]

14. What recent assessment he has made of the impact of his income tax policies on pensioners.

[The Financial Secretary to the Treasury (Nigel Huddleston)]

The Government have nearly doubled the personal allowance since 2010, and in 2024-25 it will be more than 20% higher in real terms than if it had been uprated by inflation since 2010-11. The personal allowance is currently set at a high enough level to ensure that pensioners whose sole income is the full rate of the new state pension, or the basic-rate pension, do not pay any income tax.

[Helen Morgan]

I have been contacted by pensioners in my constituency who get a full state pension plus protected payments from the old scheme. The increase in their pensions in line with inflation has put them over the personal allowance threshold for paying income tax, which has eaten away at that increase. Was it the Minister’s intention in the Budget to drag pensioners into paying income tax?

[Nigel Huddleston]

As I have outlined, and as the Resolution Foundation and others have pointed out, pensioners have gained about £1,000 on average as a result of the Government’s decisions since 2010 to increase thresholds. Some pensioners rely solely on the state for their incomes, and we are supporting pensioners through a variety of other measures: not only the triple lock but pension credit and cost of living support. Pensioners across the country will benefit from the 8.5% increase coming in April.

Oral Answers to Questions

Helen Morgan Excerpts

Tuesday 6th February 2024 Commons Chamber

[Jeremy Hunt]

My right hon. Friend is absolutely right: we must remember and honour the sacrifices made by those of all nationalities and religions who fought for our freedom, including, I believe, nearly 150,000 Muslims who died in the second world war. My officials would be happy to engage with him to identify how best the Government can help make this vision a reality.

[Helen Morgan (North Shropshire) (LD)]

T6. Business owners and high street businesses in Oswestry told me that their biggest challenge is business rates. In his upcoming Budget, will the Chancellor consider a radical reform of business rates that puts the high street on an even keel and on a level playing field with the online retailers?

[Nigel Huddleston]

Over the past few years, we have helped to support our high streets by freezing multipliers and, importantly, targeting further relief at the retail, hospitality and leisure sector. Frequent revaluations are now par for the course, because of the recent changes we have made.

Mortgage Charter

Helen Morgan Excerpts

Monday 26th June 2023 Commons Chamber

[Jeremy Hunt]

What I would say to the hon. Gentleman’s constituents is that we are taking the difficult decisions to deal with inflation in this country, as other countries are doing. We will do what it takes, because dealing with inflation is the only way in the long run that we can stop more families going through what is happening to the constituents he mentions.

[Helen Morgan (North Shropshire) (LD)]

I have constituents whose mortgages were with Northern Rock when it collapsed back in 2008. They have been moved against their will to inactive lenders that have not allowed them to remortgage on fixed rates. They are now, and will continue to be, trapped paying variable rates for a long time. Is there any help for mortgage prisoners in the measures that the Chancellor has announced today?

[Jeremy Hunt]

The hon. Lady raises a very fair point. I will write to her with some details of what we are thinking in that area.

Council Tax and Stamp Duty Alternatives

Helen Morgan Excerpts

Wednesday 17th May 2023 Westminster Hall

[Kirsty Blackman (Aberdeen North) (SNP)]

Thank you for your diligence in chairing the meeting this afternoon, Mrs Harris. It has been a busy debate, so it has not been the easiest job.

I congratulate the hon. Member for Barrow and Furness (Simon Fell) on securing this debate. It is important that we discuss and think about the future of tax policy. Too often, there are only seven of us in the Chamber when tax policy is being discussed, so it is nice to see such a full room talking and thinking about the future of tax.

The situation in Scotland is similar but different: we have council tax and we have stamp duty, but it is now called the land and buildings transaction tax and is structured slightly differently. We introduced the LBTT in 2015, and it has been in place since then. The charge we pay in Scotland is more proportionate to the property price than stamp duty is in England, and we have a slightly different system that means that 40% of people who buy houses—it is separate from the additional dwelling supplement—do not pay any LBTT. Also, if a property is under £175,000—the majority of first-time buyers buy at that level—the LBTT is not payable at all.

[Helen Morgan (North Shropshire) (LD)]

On the point about stamp duty and similar taxes, does the hon. Lady agree that there is an opportunity to graduate those taxes to reflect the energy performance of a building so that we might encourage people to retrofit buildings and use the tax regime in a way that would meet some of our carbon targets?

[Kirsty Blackman]

I had not considered that before. It is very novel, and a good idea that should definitely be considered.

We are looking at council tax reform in Scotland. We agree that the system is not currently as fair as it could be. The Scottish Greens, along with the SNP and the Convention of Scottish Local Authorities, are planning short-term reforms and looking at how to approach long-term reforms to council tax. We also have a more proportionate system in Scotland for council tax. The hon. Member for Westmorland and Lonsdale (Tim Farron) talked about the amount that the highest payers pay, compared with the lowest payers. It is different in Scotland, where it is higher for those at the top.

Council tax is significantly less in Scotland, as my hon. Friend the Member for Glenrothes (Peter Grant) mentioned. Our properties are £600 less for a band E property on average across Scotland compared with England. The Scottish Government have committed to abolishing council tax for anyone under the age of 22. That flies in the face of what the UK Government are doing, which involves paying young people less, giving them less in benefits and, basically, disadvantaging them at every opportunity.

We also have a situation whereby people who were looked-after children on their 16th birthday will be eligible for a council tax reduction to zero until their 26th birthday. We have put that in place because we recognise the hardship that young care leavers feel in many areas of life, so things are slightly different in Scotland. We still do not have as fair a system as we would like, and we are still looking to reform it, but we are committed to making those changes.

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[Andrew Griffith]

In the interests of trying to reflect the views of hon. Members, I will not be distracted by that interesting idea. Again, the proposal that has been put forward does acknowledge the opportunity for local authorities to diversify their sources of revenue. One of the issues that, as a democrat, I find most problematic with this proposal is the impact it would have on local authorities. Their ability to raise revenue for themselves would be taken away, which would be one of the single biggest—and adverse, in my view—issues for local government. The system is often accused of being overly centralised, but this proposal would absolutely remove any ambiguity whatever, and that is something that the advocates of this proposal may want to think about.

[Helen Morgan]

Will the Minister give way?

[Andrew Griffith]

I will give way—sparingly.

[Helen Morgan]

I am grateful to the Minister for giving way. On the point about stability, surely a simple step to address some of the inequality in the current system would be to reassess the valuations and introduce higher bands of council tax.

[Andrew Griffith]

Higher bands have been introduced over time. It has been a long time—just as a point of fact—since there has been a revaluation. I note that both the Labour party and the Liberal Democrat party served in Government for significant periods during that time, so it is not just among Government Members that there is caution about some of the unintended consequences of doing something that affects so many people. The impact on those with low and fixed incomes of moving any sort of basis of property tax should be thought about carefully.

The hon. Member for Leeds East (Richard Burgon) was candid about his desire to soak the rich with wealth taxes. What we are talking about would effectively be an imperfect wealth tax, because it would be a tax on that proportion of wealth that relates only to residential property and it would not be comprehensive. For that reason, there would be people who were asset-rich but cash-poor, such as widows, who would have to think through the consequences.

Moving towards a more periodic review of values poses the question of how that revaluation would take place. Certainly, some of us are shy of algorithms, but in all likelihood, unless we were to recruit an army of estate agents-meet-inspectors, we would be using some algorithmic method. In fairness, colleagues on both sides have talked about the status quo, but there would also potentially be unfairness in a mechanistic approach.