Farming Families
Lord Carrington Excerpts(1 week, 2 days ago)
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Lord Carrington (CB)
My Lords, I also thank the noble Baroness, Lady Northover, for bringing this debate forward and for her extremely powerful speech. I declare my interests in farming as set out in the register.
Like others, I attended the farming demonstration in Whitehall on Tuesday, which only confirmed the desperation in the farming and small-business community in relation to the Budget measures affecting them, particularly the changes to APR and BPR. I would like to concentrate on the likely effect of these measures on growth and investment in the industry and, by association, the continuity of family farms.
When a previous Government first introduced these inheritance tax reliefs, it was on the basis that tax charges, when there was a change of ownership of a family business, were viewed as having a
“damaging effect on risk-taking and enterprise within a particularly important sector of the economy”.
This rationale remains, and is why agricultural relief has existed since the late 19th century, when estate duty was introduced. Using IHT reliefs to pass on a family farm is not about avoiding tax; it is about facilitating the long-term stewardship of the land and keeping the family business going.
Unfortunately, at present there is considerable dispute on the number and nature of farming businesses likely to be affected, so I urge the Minister to ensure that the Treasury, Defra, the NFU and the CLA establish an agreed factual base as soon as possible, as well as then having the much-needed meeting between the Chancellor and the NFU.
Remember Mark Twain’s dictum:
“There are three kinds of lies: lies, damned lies, and statistics”.
Perhaps this is case here. Current government figures for APR claims appear to be based on only one year—2020-21—and no BPR figures have been given. Clearly, this is insufficient information. The £1 million combined APR/BPR limit per person will protect only the very smallest of farms. These tend to be smallholdings operated as a sideline for people with other sources of income; they are not the businesses that provide most of the nation’s food.
The payment of the proposed IHT in an industry of low and volatile returns, which is asset rich and cash poor, will result in the sale of land, which will affect the viability of farms and inevitably have huge consequences for further investment in both working capital and fixed capital, which could also increase any future IHT liability. Have the Government assessed in any way the likely impact on growth and productivity in farming as well as the consequential effect on related businesses and communities?