Farming and Inheritance Tax

Louise Jones Excerpts

Wednesday 4th December 2024 Commons Chamber

[James Murray]

The data we did not have before the general election was the £22 billion black hole that the hon. Gentleman’s party left in the public finances. He knows that, because it is acknowledged by the Office for Budget Responsibility that the full information was not shared with it. It has said that its forecast would have been “materially different” had it known that that was the case. We have had to take a number of difficult decisions.

[Louise Jones (North East Derbyshire) (Lab)]

This talk of data reminds me that over 12,000 farmers and agribusinesses have gone out of business since 2010. Will the Minister reassure me about what we are doing to improve profitability in British farming?

[James Murray]

My hon. Friend is absolutely right to highlight the decimation of businesses during the Conservatives’ time in office. Businesses across the economy need stability, public finances on a firm footing and investment in our public services. That is what businesses across the country need to invest for the future and grow.

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[James Murray]

I am going to make some progress. I am going to continue to explain how some of the other exemptions within the inheritance tax system will benefit people affected by this policy.

[Louise Jones]

Can the Minister confirm that in the case of farms worth several million pounds, any mortgageable value is not included for the purpose of inheritance tax? Might that explain the discrepancies in some of the figures that are being bandied around, in which I believe mortgages have not been taken into account?

[James Murray]

That is an important point. Looking at the pure asset value of farms does not tell us what their inheritance tax liability might be. As my hon. Friend rightly points out, any liabilities must be netted off against the value of any estate, and the ownership structure—the various nil rate bands, previous spousal transfers, giftings and so on—need to be considered.

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[Katie Lam]

I could not agree more with the hon. Gentleman. My farmers tell me that these inheritance tax bills will take decades of profit to pay off, so they will keep doing the job that they were doing yesterday, but with a fraction of the cash that they had before—which was not a lot to begin with.

Finally, I want to address the idea that farmers can simply give farms away and live another seven years. It is incredible that the Government should introduce a tax in one breath and encourage people to avoid it in the next, and it makes a mockery of the whole policy. If it is true, then the tax will not raise any money for the Government, but instead increase bureaucracy and advisory fees for farmers. Mostly, though, for many people, it is not an option or it will not work. People have not been given enough time to plan for these changes. My constituent Ross grows hops in Tenterden. As he watched the Budget, his father, who is in his 70s, was suffering from sepsis and fighting for his life in hospital.

Especially in farming, our most dangerous industry, people cannot guarantee that they will live another seven years after having handed over the farm. Another of my constituents is in remission, having recently recovered from cancer. If the cancer returns, it is likely to be terminal. This constituent is in their early 50s. Are the Government seriously suggesting that my constituent should hand over, not just the farm, but the home that they live in to their teenage children?

Many of my farmers live in their farmhouses and are planning to work the rest of their days. They do not have pensions; they do not have plans that would allow them to spend the last decade of their lives—of course, it may be much more—no longer farming the land that they have farmed for the whole of their lives up until this point. Finally, to raise a point that seems to have been almost entirely ignored, doing this will incur eye-watering capital gains tax bills. For some of my farmers, it will mean hundreds of years’ worth of land revaluation that they similarly cannot afford to pay.

[Louise Jones]

Is the hon. Lady aware that the capital gains tax starts from the moment of a person deceasing, not from when they bought that land?

[Katie Lam]

What I have been told by my farmers, based on the tax advice that they have been given, is that the bills—and not just the inheritance tax on decades of profits—will be completely unaffordable.

Farming is hard. It is not like any other industry: it is a culture and a way of life. It is lonely, revenues are uncertain, profits are tiny and cash is tight.

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[Louise Jones (North East Derbyshire) (Lab)]

All Governments have to make tough decisions. Faced with a £22 billion black hole, Labour has chosen to raise taxes on only the very wealthiest. The Conservatives’ record was instead to choose to place the burden on the poorest in society—those with disabilities and those who are very young. In fact, I am seeing that in real time in Derbyshire, as the Conservative leader of Derbyshire county council has chosen not to spend his time dealing with the disastrous recent Ofsted report on the sorry state of special education needs and disabilities provisions in Derbyshire affecting thousands of vulnerable children, or trying to deal with the terrible county finances which it is trying to plug by closing much-loved care homes, again leaving some very vulnerable people with an uncertain future. Where was he? He was marching with wealthy landowners down here in London. I ask the shadow Minister what she thinks first attracted various multimillionaires in various industries to suddenly discover a passion for farming and buy farms in their late middle age.

I had thought that the Conservatives would want to discuss the huge challenges facing our NHS, the cost of living crisis affecting so many of my constituents or their failed track record in delivering vital regional infrastructure; but no, we have had silence on those issues. What has got them out literally marching on the streets is a rush to defend multimillionaires. My constituents can see what is the No. 1 priority, and it is not the same as theirs. Let us be clear: retaining the status quo, for which the Conservatives are arguing, would see 7% of claimants receiving 40% of the relief. That is £219 million given to just 117 estates. Why should 117 of the richest get £219 million in tax relief, and not ordinary families?

One would have thought that, after such a profound rejection of their party’s record in government back in July, the Conservatives would have taken some time to listen to the electorate and learn. The electorate saw that this Labour party was different, and voted us in. Perhaps the Conservatives should take a closer look—and here I include the hon. Member for Perth and Kinross-shire (Pete Wishart). Many of my colleagues are deeply rooted in their rural communities, and I myself come from a family of farmers. In fact, I spent most of my family Sunday lunch listening to an in-depth monologue on SFI technical details, which was of course very welcome. While the Conservatives are rushing to defend the wealthiest in society, we in Labour will be focusing on what matters to rural communities: access to rural health facilities, a record £5 billion for farmers, a new commissioner for tenant farmers—which is fantastic—a new rural crime strategy, and protecting farmers from bad trade deals.

Coming from a family of farmers, I know a wolf in sheep’s clothing when I see one. However much the Conservatives bleat about standing up for farmers, their bushy tails and terrible record for farming over the past 14 years tell me otherwise. I will always fight for farmers, to improve farming incomes and to support farming communities. That is my priority, and it is the priority of this Government.