Budget: Implications for Farming Communities

Lindsay Hoyle Excerpts

Monday 4th November 2024 Commons Chamber

[The Minister for Food Security and Rural Affairs (Daniel Zeichner)]

I welcome the right hon. Gentleman to his place—he will make an excellent Chair of the Select Committee on Environment, Food and Rural Affairs—and thank him for the opportunity to talk about this important issue.

As the Minister for Food Security, I can assure the House that food security is national security. The Government’s commitment to supporting farmers and rural communities is unwavering. We have committed £5 billion in the agricultural budget over the next two years—the biggest ever budget for sustainable food production and nature recovery in our country’s history. We are also releasing £60 million to support farmers whose farms have been devastated by severe flooding, and investing £208 million to protect the nation from potential disease outbreaks that threaten our farming industry, food security and human health.

However, as we are all only too aware, the Conservatives left behind a £22 billion black hole in our nation’s finances—[Interruption.] Yes, you did. And this Government have had to take tough decisions on tax, welfare and spending to fix the foundations and deliver change, including a series of decisions on tax to protect the payslips of working people. That is possible only by making changes to other taxes, such as agricultural property relief, which was previously available to all agricultural property at a rate of 100%. Currently, small farms can find themselves facing the same levels of tax bills as much larger farms, despite having a much smaller asset. Twenty per cent of agricultural property relief is claimed by the top 2%; 40% is claimed by the top 7%. That is not fair, it is not sustainable, and sadly, it has been used in some cases by wealthy landowners to avoid inheritance tax. That is why the Government have announced plans to reform agricultural property relief.

The Secretary of State met National Farmers Union president Tom Bradshaw this morning. We absolutely understand—[Interruption.]

[Mr Speaker]

Order. Dr Mullan, I heard you before, and I am certainly not putting up with it this time. If you want to leave, do so now, because I want to be able to hear others. Do we understand each other?

[Dr Kieran Mullan (Bexhill and Battle) (Con)]

indicated assent.

[Mr Speaker]

Thank you. Carry on, Minister.

[Daniel Zeichner]

The Secretary of State met Tom Bradshaw this morning. We completely understand farmers’ anxieties about the changes, but rural communities need a better NHS, affordable housing and public transport, and we can provide that if we make the system fairer. The reforms to agricultural property relief mean that farmers can access 100% relief for the first £1 million and 50% relief thereafter—an effective 20% tax rate. That means that an individual can pass up to £2 million, and a couple up to £3 million between them, to a direct descendant, inheritance tax-free. Currently, 73% of agricultural property relief claims—

[Mr Speaker]

Order. I do not know whether you are aware, Minister, but you only have three minutes. How long will you be now? Are you coming to the end at this minute?

[Daniel Zeichner]

In 20 seconds.

[Mr Speaker]

Marvellous. Come on, then!

[Daniel Zeichner]

Seventy-three per cent of agricultural property relief claims are for less than £1 million. The vast majority of farmers will not be affected. They will be able to pass the family farm down to their children just as previous generations have always done. It is a fair and balanced approach that protects family farms while also fixing the public services that those same families rely on. It is part of a Budget that will restore economic stability and begin a decade of national renewal.

[Mr Speaker]

I call the Chair of the Environment, Food and Rural Affairs Committee.

[Mr Carmichael]

I remind the House of my entry in the Register of Members’ Financial Interests.

Thank you, Mr Speaker, for allowing this urgent question. I also thank the Minister for his statement, but I fear that it illustrates rather well some of the lack of understanding that has brought us to this point. More than any other industry, farming relies on stability and long-term planning. That is why many people in the industry relied on undertakings given by the Secretary of State when in opposition that the Labour party in government would not change inheritance tax reliefs for farming.

Every farming business is capital-rich but revenue-poor. Those businesses also trade in a market that has been more heavily influenced by government intervention than any other. Agricultural property relief is not a loophole; it has been a deliberate policy of successive Governments for the past 40 years, designed to avoid the sale and break-up of family farms. Is that still a goal to which this Government adhere? As the NFU put it, the Government have seemingly failed to grasp

“that family farms are not just small farms, and that just because a farm is a valuable asset it doesn’t mean those who work it are wealthy.”

As the Minister will be aware, some of the figures he has just given the House have been vigorously challenged over the past few days, particularly the assertion that only one in four British farms will be affected. Will the Minister and his Treasury colleagues publish the data behind those figures? In particular, does the figure that 73% of farms will not be affected rely on the inclusion of very small holdings?

These changes will have a ripple effect across the whole rural community. Will the Government publish their impact assessment for other rural businesses? Can the Minister also explain why the Treasury has removed the ringfence around farm support to be spent in Scotland, Wales and Northern Ireland? That ringfence was introduced after the Bew review. If it needed a review to introduce it, how can it just be abolished now out of the blue?

The Prime Minister has said in the past, and the Minister has repeated today, that food security is national security. Can the Minister point to one measure in this Budget that makes achieving that aim easier, rather than harder?

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[Daniel Zeichner]

I thank my hon. Friend for her contribution. Can I say how much I enjoyed visiting Wales, with the Welsh Minister, very early in my tenure? It was an important sign from this Government that we take farming seriously across the entire United Kingdom.

I share my hon. Friend’s very strong points about the importance of the family farm. What we are doing here is protecting the family farm. I have visited right around the country over the past five years, and on almost every visit, people have told me that they are concerned about people coming from outside—they often say “up London” or “down London”—with a lot of money and buying up local farmland over the heads of local people, not because they care about farming but to use that farmland for tax evasion purposes. This policy can be helpful to family farms and protect them against—[Interruption.] The hon. Gentleman on the Opposition Front Bench says from a sedentary position that it will not, but it is people from his area who have been telling me about these problems. They repeated them constantly when we were in opposition, and here are a Labour Government doing something about it.

[Mr Speaker]

I call the shadow Minister.

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

Mr Speaker,

“losing a farm is not like losing any other business—it can’t come back.”

Those are not my words, but the words of our Prime Minister at the National Farmers Union conference just last year. Over the weekend, we have heard gut-wrenching stories from farmers up and down the nation who feel completely and utterly betrayed by the measures in this Budget. I ask the Minister: why does the Secretary of State continue to say that he is proud of his family farm tax? Does the Minister realise that the vast majority of farming families are not multimillionaires? Most are cash poor and many are struggling to break even. How does the Secretary of State expect farmers, in his words, to do—[Interruption.]

[Mr Speaker]

Order. Can I just say to the hon. Member for East Thanet (Ms Billington) that I do not need any chuntering? Do we understand?

[Robbie Moore]

How does the Secretary of State expect farmers to do more with less? Why is he happy to hand our next generation of farmers an impossible tax bill?

Next, the Government claim that small family farmers will be protected, yet the Country Land and Business Association and the NFU have today disputed the Government’s figures. Will the Minister commit to releasing a full assessment of his policy, including an impact on national food security?

While the changes to inheritance tax relief have been gaining the national headlines, there are many other negative impacts on farming businesses from the Budget. Increased national insurance contributions, coupled with a lower national threshold; an accelerated reduction in de-linked payment rates; higher taxes on double-cab pick-up vehicles; new taxes on fertilisers—I could go on, but this all begs the question: does the right hon. Member for Streatham and Croydon North (Steve Reed) actually know anything about farming at all? More importantly, after the Secretary of State looked British farmers in the eye and specifically promised them that there would be no changes to agricultural property relief, how on earth can farmers believe a single word that his Minister is about to say?

--- Later in debate ---

[Daniel Zeichner]

I am grateful to my hon. Friend because she makes some important points. Ahead of the Budget, there were lots of predictions about what would happen. Of course, what happened is that this Government have protected the farming budget—indeed, raised it—and we are absolutely committed to paying out to farmers the £60 million that they deserve for flooding. That is £60 million, of course, that was not really budgeted for by the Conservatives, as part of their £22 billion black hole. The difference between us and them is that we are taking a responsible approach, which means that farmers can look forward to a stable future, as opposed to the chaos of the last decade.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Farmers across the United Kingdom are coping with the lingering legacy of betrayal—betrayal from the trade deals that happened under the last Government, which threw them under a bus; and betrayal from the transition from the old payment scheme to the new one, which saw many of them going bust or forced into making business decisions that they would never, ever have chosen. That legacy of betrayal is one that hangs heavy, and it is why farmers in my constituency and elsewhere feel so utterly disappointed by this Government’s Budget last week.

Let us look first at the agricultural property relief changes. There are 1,500 farms in Cumbria and 440 in my constituency affected by this. Has the Minister done an investigation into the number of farmers who are living on less than the minimum wage each year in terms of income, but who have a property that will be affected by these changes, particularly given the 41% decrease in farm incomes under the Conservative Government over the last five years? Will he also assess the impact on tenant farmers? Some 50% of my farmers are tenants and will be affected by the disruption that this change will create. Would it not be wise for him to implement the Rock review of tenant protections before introducing something like this? Will he also look again at the £2.4 billion budget and increase it by £1 billion, just as the Liberal Democrats suggest? If we do not feed ourselves, we are a failing country.

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[Daniel Zeichner]

I see the hon. Gentleman nodding. He is well versed in that; he knows.

[Mr Speaker]

Order. Can I just say that brevity will be helpful? I believe that everybody has a constituency interest, so I really want to get everyone in. If we can have shorter answers, that would be better. Also, if the Minister looked at me now and again, that would help me hear what is being said.

[Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)]

I declare my interests as a farmer.

A 75-year-old farmer emailed me last week and said

“we work long hours, usually alone.”

He said that agriculture

“has one of the highest suicide rates of any industry. There is a great deal of talk these days about mental health and the need to alleviate stress in the workplace, yet”

last week the Chancellor and the Secretary of State for agriculture

“destroyed everything I have ever worked for.”

How would the Minister answer that?

[Ashley Dalton (West Lancashire) (Lab)]

I spent about 14 months in this place asking the former Government about water management, but I was always on a hiding to nothing. Does my hon. Friend recognise that the farmers in my constituency have a lot of expertise in water management and land management? Will he tell us how the Budget supports farmers to bring that expertise to the fore and work in partnership with us to manage that land and water?

[Mr Speaker]

The best potatoes.

[Daniel Zeichner]

I am grateful to my hon. Friend. The schemes we have in place will help us to work with farmers on those issues—alongside, of course, the payment of the £60 million that the previous Government promised.

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[Richard Tice (Boston and Skegness) (Reform)]

Are the Minister, the Secretary of State and the Chancellor aware that so serious are the consequences of this policy that the heads of farming families in their 80s and 90s are seriously considering committing suicide before it comes into place? [Hon. Members: “Shame!”] Shame on you! [Interruption.]

[Mr Speaker]

Order. I do not need any after-comments.

[Daniel Zeichner]

I find it hard to respond to a question like that. I spoke earlier about using language carefully, and I would just reiterate that point.

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[Rachel Gilmour (Tiverton and Minehead) (LD)]

I have 1,600 farmers in my constituency. Some 432 farms will be affected by this silly idea, not to mention the families, their employees and the shopkeepers who rely on our rural economy. This policy is insensible, irrational and plain wrong in its interpretation of real life in our rural communities. It will be like the highland clearances. Hundreds of years of tradition will be lost to the taxman. Before I ask the Minister to think again, I can say with absolute certainty that the policies of the Conservative and Labour parties have reaffirmed the fact that the Liberal Democrats are the only true champions of farmers and the countryside—

[Mr Speaker]

Order.

[Rachel Gilmour]

Sorry. Will the Minister—

[Mr Speaker]

Order. Sit down, please. The question was long enough. We do not need to start playing politics around the Chamber.

[Daniel Zeichner]

I do not recognise those figures. When I look at the figures that the Treasury gave for the number of claims in the last year available, that is very close to the number in the hon. Lady’s own constituency, which seems unlikely to me.

--- Later in debate ---

[Caroline Voaden (South Devon) (LD)]

South Devon has some of the most expensive land in the country, which makes every farm, regardless of its size, worth a lot of money on paper. One farmer in my constituency said over the weekend:

“We may be land rich but we are cash poor and our children will more than likely have to sell the land and maybe buildings to cover the tax. Without the land, the farm is simply no longer a farm, taking valuable land out of food production.”

The Minister says he values food security, and agricultural property relief gave us that food security. He says—

[Mr Speaker]

Order. I think the Minister has got the point.

[Daniel Zeichner]

I understand the point but, first, much of this can be avoided through proper planning. Secondly, Devon is one of the counties where we most often hear it said that people are coming in and buying up land for the wrong reasons.