Inheritance Tax Relief: Farms

John Lamont Excerpts

Monday 10th February 2025 Westminster Hall

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

It is a pleasure to serve with you in the Chair, Sir Edward. Today I will highlight the shortsighted, reckless and misguided Labour policy to increase tax on farmers. I start by paying tribute to the petitioner for raising this important issue, and to the hundreds if not thousands of farmers outside this place showing how much they hate the policy.

It is an issue that has dismayed and appalled my constituents in the Scottish Borders. They are bitterly disappointed because this decision by the Prime Minister will mean the sad—even tragic—end of many family farms. Many farmers will no longer be able to pass their property, on which their ancestors may have worked for decades or longer, on to the next generation. That is not right. It is not why they have worked so hard to look after the countryside, and why they have got up early and worked late all their days.

What makes it worse is that they feel betrayed by a Labour Government that promised this would not happen. Labour made it abundantly clear that it would not increase taxes on farmers. But just like with the winter fuel payment to pensioners, and national insurance rises on businesses, Labour did not tell the truth. It broke its promises, and the consequences of it not keeping its word will be profound to people in the Borders, Scotland and the United Kingdom.

It is not only farmers in my constituency that the policy impacts, nor only workers in the rural economy, nor businesses in the food and drink industry. If the policy continues, it will affect everyone in one way or another. Labour’s decision will force the breaking up of many family farms, which will be tragic for those families. But it will also mean higher prices in shops and supermarkets for the rest of us. It will put our food security at risk and harm the environment, as we are forced to rely on costly imports that are not as high quality and that are flown in from much further away. How does any of that make sense?

[Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)]

Does my hon. Friend share my concern that, with the Government showing their inability to crack a good deal when they go into negotiations, they may well give in on any potential trade deal with America and allow cheaper products to undermine our beef and chicken farms?

[John Lamont]

My right hon. Friend makes an important point. If we are no longer self-sufficient in food production, we will become much more dependent on lower quality overseas imports.

Labour has made a grave error, which will cost our farmers and our country dearly. That is why so many people in the borders and across the whole United Kingdom are concerned by this decision. It will have negative consequences that last generations, and that may not be reparable. Unlike any other businesses, farms cannot come back once they close; they are often gone for good.

Labour simply is not listening. The Government even admitted as much to me lately: I submitted a question to the Secretary of State for DEFRA to ask how much correspondence his Department had received from individuals making representations on changes to APR and business property relief for inheritance tax since October, and the only response I got was that Ministers do not know—they do not have this information. That shows a stunning lack of respect for farmers and food producers. The Labour Government simply do not care.

Labour needs to rethink its family farm tax policy. Labour said “change” often enough in the run-up to the general election, and that is exactly what needs to happen now: this deeply damaging policy needs to change. It needs to be scrapped, or family farms will be lost, supermarket prices will go up, food security will be at risk and our environment will suffer. The Scottish and British people have spoken on this policy; now, Labour needs to listen.

--- Later in debate ---

[Robbie Moore]

I could not agree more. It is telling that we have had strong representation in this debate not only from Northern Ireland, but from Scotland and every part of this United Kingdom. All Members have voiced their concerns that Labour’s choice to bring in the family farm tax will have catastrophic consequences not only for the hard-working families who are outside the gates of the Houses of Parliament right now, but for the wider agricultural sector.

Similar comments were made to me at the Yorkshire agricultural machinery show, which I attended earlier this week. Machinery dealers told me that they are being impacted not only by the lack of confidence resulting from Labour’s choices to reduce inheritance tax relief, but by the consequences of employer national insurance and other pressures being put on the wider sector. As if that were not bad enough, the business owner I spoke to will, by their own calculation, face a nearly £800,000 tax liability on death as a result of the changes to business property relief. That business has been trading for over 130 years and now faces the end of the line.

The impact is not just on farming family businesses, but on the wider agricultural sector. As my hon. Friend the Member for Gordon and Buchan (Harriet Cross) said, the NFU has undertaken research that suggests that unfortunately 75% of farming businesses will be affected. Research released recently by Savills suggests that 88% of farmland will be affected. Research conducted by the Central Association of Agricultural Valuers suggests that the Government underestimate fivefold the tax impact. These are professionals in the industry, and the Government are not even willing to listen to their points.

[John Lamont]

My hon. Friend is speaking powerfully about the issues that will affect the farming community. He mentioned the NFU; I met NFU representatives in Scotland recently and was appalled that the Treasury had refused to meet them. The representative body of farmers in Scotland is reaching out repeatedly to Treasury officials for a meeting to discuss its concerns, but Treasury Ministers and their teams are refusing to engage. They are just not listening. Does my hon. Friend agree that the Treasury is just not taking its responsibilities as seriously as it should to understand the impact?

[Robbie Moore]

My hon. Friend makes the point powerfully: collectively, all industry bodies and professionals in the sector are united. The NFU, the CLA, the CAAV—of which I put it on record that I am a fellow, having previously practised as a rural practice surveyor, so I understand the implications on the value of farmland—and Savills, as a key land agent, are all saying exactly the same thing: that this Government’s policy will have catastrophic consequences. My understanding is that the Chancellor has not yet even bothered to reach out to any of those professional organisations to sit round a table and try to understand their concerns. That point was made very eloquently by my hon. Friend the Member for Bridlington and The Wolds (Charlie Dewhirst).

--- Later in debate ---

[Robbie Moore]

I say to the hon. Member that the Conservatives have been absolutely clear: we would axe the family farm tax, and we would reverse the changes to business property relief and agricultural property relief, which have such huge and catastrophic implications. In my view, the Government need to go further—not tinker with thresholds, but provide proper, decent certainty to the whole agricultural community by reversing this provision, which will have catastrophic implications that they admit themselves will give the Treasury revenue of only about £500 million. In my understanding, that would keep the NHS going for about 20 hours. Given the detrimental impact that the changes will have, the Government should think about reversing this disastrous policy.

For the 10th time of asking in this place, what impact assessment has the Treasury made of the effect on growth within our entire agricultural sector as a result of the autumn Budget? What about all the other negative implications—employers’ national insurance, the minimum wage increase, the de-linked payments significantly reducing, and capital grants disappearing—even before we start talking about the family farm tax?

When this tax was first announced at the Budget, I thought that maybe our new Labour Government were being naive. Perhaps they did not understand the catastrophic impact their Budget would have on our farming businesses, and would soon change course. After six months, however, the Government have consistently refused to listen to the NFU, the CLA, the Tenant Farmers Association, the CAAV, Opposition Members and others who have repeatedly tried to expose the damaging impact of the tax.

[John Lamont]

My hon. Friend is being very generous with his time. One group he has not yet mentioned is the supermarkets: Tesco, Asda, Marks & Spencer, Lidl, Aldi, the Co-op, Sainsbury’s and Morrisons have all urged the Labour Government to pause and consult, because the UK’s future food security is at risk as a result of this policy.

[Robbie Moore]

That is absolutely the point. Others outside the sector, including all our supermarkets, have come together in agreement to say how catastrophic the damage caused to the farming sector by this Labour Government will be. Indeed, the 250,000 who signed the petition launched by the shadow Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for Louth and Horncastle, which was presented to the Treasury a month ago, all agree with the comments that Opposition Members are making.

The Labour Government have wilfully ignored the farming community, the machinery dealers, the feed merchants, the auction marts, the supermarkets, the wider agricultural sector, including accountants, bank managers and land agents, and indeed the wider public. All have voiced their concerns that the family farm tax will have a crippling impact on UK agriculture. On top of that, as I said, the Chancellor continues not to meet any stakeholders. Today, as we have seen, no DEFRA Minister has even had the decency to turn up to this debate, despite its being of incredible importance.

No, the Government were not being naive. The reality is much worse. What is now clear is that this Government’s family farm tax is purposely vindictive. Indeed, I now believe that it was designed to be this way. The Government’s actual intent is to send a strong message to our farmers that they are not needed, that they do not matter and that they do not play a vital part in our national agenda.

As someone who has been involved in agriculture all my life since entering this place, this is personal to me. That is why we on the Conservative Benches do value our farmers. That is why the Conservatives will axe the family farm tax and reverse the changes to agricultural property relief and business property relief—no ifs, no buts.

As I have said, I can only hope that the Minister is about to get to his feet to confirm, right now, today—with all of our farming community watching this debate and many others on the streets of Westminster after travelling from far afield to get here—that his Government will listen, make changes and, hopefully, axe their vindictive family farm tax. If he does not, I can tell him that Opposition Members will keep coming back, again and again, until he and his Government finally stand up for our farmers up and down this country.

--- Later in debate ---

[James Murray]

I will make some progress.

The Liberal Democrat spokesperson, the hon. Member for Glastonbury and Somerton (Sarah Dyke), asked how the figures were arrived at. The figure to which I referred—520 estates likely to be affected in ’26-27—comes from taking the historical data and projecting it forward using economic determinants. She may have seen the letter sent by the Chancellor to the Treasury Committee in November, which set out how that calculation was done. I suggest that all Members read that letter to understand the basis for that 520 number.

The statistics also show how many estates claiming business property relief are likely to be affected. Around three quarters of estates claiming business property relief alone, excluding those only holding alternative investment market shares, will not pay any more inheritance tax in 2026-27. The Office for Budget Responsibility has been clear that it does not expect this measure to have any significant macroeconomic impacts.

I recognise the disagreement over this policy, but Ministers and officials have been listening carefully to the views of the farming sector and rural communities. Ahead of the Budget, there was media speculation that the Government were going to abolish the reliefs altogether. In reaction to that speculation, the Treasury received and considered several representations from the farming sector with views on retaining the reliefs. I responded to a debate on the matter in this very room on 17 October.

[John Lamont]

Will the Minister give way?

[James Murray]

I have only a few minutes left, so I will not.

I have also participated in several meetings with farming bodies since the autumn Budget 2024, and I am meeting farming bodies again shortly to discuss their concerns further. At the same time, it is important to recognise that other organisations have called for the reliefs to be abolished or restricted. Commentators have highlighted that the reliefs currently contribute to an inheritance tax system that means that the very largest estates pay lower effective tax rates than smaller estates. As the Institute for Fiscal Studies has set out since the Budget, the changes we announced will still leave farmland much more lightly taxed than other assets.

I want to address as many of the points that Members made during the debate as possible, but it is worth saying first that it is important to see the changes in the context of wider support for farmers and the rural community. The Budget committed £5 billion to farming over the next two years, including the biggest budget for sustainable food production in our history. It committed £60 million to help farmers affected by the unprecedented wet weather last year, and we are protecting farms and rural businesses by committing £2.4 billion over the next two years to rebuild crumbling flood defences.

We will also continue to provide existing support for the farming industry in the wider tax system. That includes, for example, the exemption from business rates for agricultural land and buildings, and the ongoing entitlement for vehicles and machinery used in agriculture to use red diesel, as the hon. Member for Dumfries and Galloway (John Cooper) mentioned.

On the point made by the right hon. Member for Orkney and Shetland (Mr Carmichael) about the inheritance tax treatment of Scottish agricultural leases, the Government are aware of the issue and officials have already discussed it with their counterparts in the Scottish Government. There is an existing provision in the Inheritance Tax Act 1984 that deals explicitly with the Scottish agricultural leases. Section 177 of the Inheritance Tax Act means that Scottish agricultural leases passed down on death are not included in the value of the estate.

Agricultural and Business Property Reliefs: OBR Costing

John Lamont Excerpts

Thursday 23rd January 2025 Commons Chamber

[James Murray]

The OBR’s publication yesterday sets out the costings that were in the October Budget. There is no difference between the costings set out in October and what the OBR set out yesterday. It simply showed more of the background behind how they calculated those costings, for transparency and so that people are aware. Indeed, it says in the report that that is done in an effort to improve the public debate and ensure that people understand what is behind the data published at the time of the Budget.

As I said to several Opposition Members, clearly this was one of many tough decisions that we took in the Budget to balance the public finances, but we also made sure that there is greater protection from inheritance tax under our proposed reform scheme than is available more widely.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

The Labour Government’s family farm tax will be catastrophic to farmers in my constituency in the Borders. I will join many of them and their tractors in Kelso on Saturday, when the farming community comes together to show its displeasure and disapproval of this policy. Farmers will struggle to pay this tax, so what assessment have the Government made of the policy’s impact on vets, feed merchants, machinery suppliers, and all the other people who support the rural economy?

[James Murray]

Supporting the rural economy, public services and investment right across the country is part of Labour’s national mission to get the economy growing, but the prerequisite for that investment and economic growth is stable public finances. Without economic stability, we cannot proceed to the investment and growth that we all so desperately need. That is why the decision to target agricultural property relief and business property relief was taken, alongside all the other difficult decisions that we took in the Budget.

Christmas Adjournment

John Lamont Excerpts

Thursday 19th December 2024 Commons Chamber

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

Ahead of the Christmas break, I am delighted to have this opportunity to recognise and celebrate some of the amazing organisations that serve the Scottish Borders all the year round. These groups, and the volunteers who help keep them running, often do not get the praise they deserve, so I want to mark the excellent work of those who provide unbelievable support to so many people all the year round. The generosity and compassion of volunteers and workers across the Borders are incredible.

I want to start by recognising the organisations that provide extra help to our NHS, and to patients and their families. I recently had the privilege of meeting some of the Margaret Kerr fundraising team, who help support the purpose-built, specialist palliative care unit at Borders general hospital. I would encourage everyone to give anything they can to help this wonderful group and to keep the unit operating as effectively as possible for those who need treatment and care. I also thank the volunteers at the Borders Parkinson’s support group. It was a pleasure recently to join the volunteers and service users, and to spend some time with those who attend. The meetings are well attended, good natured and very sociable, so well done to the volunteers for bringing people together in this way.

Beyond healthcare and the NHS, I want to take this opportunity to recognise the passionate community campaigners who want the best for the Borders and who put in the work to make local projects happen. The first of these fine groups is the Campaign for Borders Rail—I have worked with it for many years—which is seeking to extend the Borders railway on to Hawick, Newcastleton and Carlisle. I have been doing everything I can during my time as its MP, and previously as its MSP, to get this extension built. It is disappointing that the new Government have not yet committed to the funding to which the previous Government had committed for the feasibility study, but I will continue to push for that to be delivered. Similarly, I pay tribute to the Rail Action Group East of Scotland for its campaigns to get better train services along the east coast of Scotland and to get the station reopened at Reston a couple of years ago. I particularly want to mention two stalwarts of this campaign, Barrie Forrest and Tom Thorburn, who have done so much to improve rail services over many years.

Beyond the transport network, lots of community groups in the Borders are helping to bring people together. First, I want to mention the Men’s Shed network, which has multiple locations across the Borders to promote the wellbeing and quality of life of local people. We are particularly lucky in the Borders to have the highest number of men’s sheds located there than in any constituency in the UK. Secondly, I want to mention Escape Youth Services in Hawick, which provides incredible support to young people. I was delighted to be able to join one of its sessions recently, and the young people clearly love and enjoy the activities that the dedicated team of volunteers provide for them.

I have a few other groups to mention, including Sustainable Selkirk and the Berwickshire Marine Reserve, which help preserve our environment. I also want to mention the local people who help promote our high streets, because without thriving high streets with local businesses and shops, our communities would be greatly diminished. The team behind the Galashiels business improvement district recently had a huge success in persuading local businesses to back its plans, and I would also mention the General Store in Selkirk and Café ReCharge in Galashiels.

To conclude, I wish every Member of the House a very merry Christmas and a happy new year when it comes. Christmas is a time to be thankful, and I particularly want to thank the UK armed forces personnel who will sacrifice their own festive break to serve our country. Their selfless sacrifice and dedication should be an inspiration to us all. The same goes for those in the NHS and the emergency service workers who work through the festive period to keep us healthy and safe. We owe them all our gratitude for continuing to do their duty while most people take time off. Although their efforts are not as critical as those of our armed forces and emergency services, we should not forget hospitality workers and small business owners who also work through the festive season.

Finally, I hope we will all take the chance over Christmas to think of those less fortunate than ourselves, and to look out for our neighbours, who may be lonely or struggling more at this time of year. Even the smallest gesture of generosity can mean a lot to someone who may not have others to look out for them. Happy Christmas to everybody.