Farming and Inheritance Tax

Jon Pearce Excerpts

Wednesday 4th December 2024 Commons Chamber

[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.

--- Later in debate ---

[Jon Pearce (High Peak) (Lab)]

To misquote Brian Clough, I would not say that my constituency is the most beautiful in the country, but it is certainly in the top one. We have generations of farmers to thank for that beauty—those who protected the land and nurtured nature long before the Peak District was designated Britain’s first national park. If I thought for one second that these changes to agricultural property relief threatened future generations of farmers in my constituency, I would not vote for them, but I do not.

[David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)]

Last month, I spent a very enjoyable afternoon scoring the senior young farmers at Radnor young farmers club. These are really admirable young people who spend their afternoons and evenings looking after youngsters, often those as young as 10, and trying to encourage them into farming. Is the hon. Gentleman not concerned about the message that this change sends to our young farmers?

[Jon Pearce]

No. The message from this Government is that we are committed to farming, and to making it profitable and sustainable. That has to be the message that we send out to those young farmers.

There is no doubt that farmers in my constituency have been struggling terribly for the past 14 years, working seven days a week, 12 hours a day, for very little reward. The last Government promised them the earth, but left them in the sheep dip. After all the Brexit promises, what they got was the Leader of the Opposition selling them out in trade deals with New Zealand and Australia. Boris Johnson promised farmers that subsidies would stay at 100%, but then the Government phased out the basic farm payment. The Opposition’s incompetence saw farmers miss out on £358 million that could have been in their back pockets when they desperately needed it, and then came Liz Truss. Her mini-Budget and all those unfunded tax cuts—a point that I will return to—crashed the economy, causing interest rates to rise and driving many farmers to the brink. Over 12,000 farmers and agricultural businesses were lost under the last Government, so we will not take any lectures from the Opposition about the farming industry.

[Sir Gavin Williamson]

The hon. Gentleman has 428 farms in his constituency. How many of those farmers will thank him for supporting the Government today?

[Jon Pearce]

I live in one of the rural villages and speak to the farmers in my villages all the time. The fact is that those farmers voted for me because they were so let down by the last Government.

[Several hon. Members rose—]

[Jon Pearce]

I will not take any more interventions at the moment. Before the Budget, I sat down with farmers in my constituency. They wanted to talk about two things. First, they were concerned about the effect of the changes to APR on family farms.

[Dr Shastri-Hurst]

Will the hon. Gentleman give way?

[Jon Pearce]

No, I will not. Secondly, they were concerned about cuts to the farming budget. The Chancellor delivered £5 billion for the farming budget, the largest ever investment in sustainable food production and nature recovery, and she delivered in terms of protecting family farms in my constituency.

[Dr Shastri-Hurst]

Will the hon. Gentleman give way?

[Jon Pearce]

No, I will not give way at this stage. Let us be clear: only 4% of estates in this country pay inheritance tax. As we have repeatedly heard, these changes will mean that a couple will be able to leave £3 million-worth of estate to their children without paying a penny in inheritance tax. To put that in context, if a couple owned a £3 million mansion, they would be paying £940,000 in inheritance tax.

[Several hon. Members rose—]

[Jon Pearce]

I will not give way at this stage. Those estates over the threshold will have a 50% reduction in the amount they pay. We have already heard that the seven-year rule will continue to apply, so farming families will be able to make plans for the future.

[Freddie van Mierlo]

Will the hon. Gentleman give way?

[Jon Pearce]

Sorry, I will not give way at this stage.

This debate has, however, shone an important light on one issue, which I am grateful to the right hon. Member for Orkney and Shetland (Mr Carmichael) for raising: the fact that our farmers are working day in, day out, for very little profit. The question is how we support them to be profitable again. Energy bills are one of the biggest costs farming businesses face. This Government will help bring down those costs through GB Energy and by introducing grid reform to allow farmers to plug renewables into the national grid. We must protect them from being undercut by foreign imports.

[Harriet Cross]

Will the hon. Gentleman give way?

[Jon Pearce]

I am sorry, but I will not.

We must create a greater marketplace for farming businesses by using the Government’s purchasing power to ensure that 50% of the food bought for our hospitals, prisons and army bases is produced by local farmers.

Here is the most important point: we have to provide farming businesses with economic stability. The Leader of the Opposition has already failed to learn the lessons of the Liz Truss Budget, with £6.7 billion of unfunded tax cuts already announced in a matter of weeks. The Opposition need to tell us how they are going to pay for that. What are they going to cut? Are they going to cut the farming budget—are we going to lose the £5 billion from the farming budget?—or are they going to borrow and put us right back in the position we were in with Liz Truss, with interest rates rising and farms going out of business? I will not be voting for the Opposition motion; I will be supporting farmers in my constituency and providing the economic stability they need.