Farming and Inheritance Tax

Pete Wishart Excerpts

Wednesday 4th December 2024 Commons Chamber

[Victoria Atkins]

I am so sorry—in fairness, the hon. Gentleman was obviously speaking to farmers in his constituency on Sunday. Did I hear that there is a protest going on in his constituency at the moment? In any event, I actually made the announcement on national television on Sunday; perhaps he was not watching. Farmers at home will be wondering what on earth we are arguing over.

[Pete Wishart (Perth and Kinross-shire) (SNP)]

One word that the right hon. Lady has not mentioned is Brexit—the great Tory disaster of the last Parliament. How much does she estimate that Brexit cost farmers and the rural community?

[Victoria Atkins]

The hon. Gentleman and I, unusually, can join forces on this matter. While I am going to resist the temptation to revisit Brexit, what I will do is point him to paragraph 4.11 of the CAAV report—

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[Tim Farron]

That is nonsense. Wherever Liberal Democrats are in control, we back and support our farmers and are proud to do so.

Talk is cheap, and most people in this House will at some time quite rightly have uttered the sentiment that British farmers are the best in the world, without actually understanding why. It is true that they really are the best in the world, and that is because the way in which our farming economy is structured is based on the family farm. Family farming makes a difference because it has close husbandry, higher environmental standards, higher welfare standards and better quality produce. It is not an accident that British farming is the best in the world.

[Pete Wishart]

Does the hon. Gentleman think that the difficulty with the Labour party is that it just does not understand farmers, because they do not fit neatly into its clumsy definition of what a working person is? These are people who work 12 hours a day, outside in the toughest environment, and who work into their old age, but they do not get into the Labour club.

[Tim Farron]

There is something in that, and I will come to that in a moment when I talk about poverty in our countryside, when it just does not look the way people in urban communities think it ought to look.

There is no doubt that family farms are under attack, but this did not start on 4 July, and I want to go through why we have ended up where we are now. The botched transition from the old farm payment scheme to the new one is the principal source of hardship among our farmers. Let us start with the fact that the environmental land management scheme—ELMS—budget saw a £350 million underspend under the last Government, and that was not an accident. It was blindingly obvious that that was going to happen. One hill farmer I spoke to just last month told me that, as a consequence of the transition, he will lose £40,000 a year in basic payment. To replace it, he will gain £14,000 under the sustainable farming incentive. By the way, it cost him £6,000 to go through a land agent in order to get in in the first place.

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[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.

[Pete Wishart]

Will the hon. Gentleman give way?

[Sir Geoffrey Clifton-Brown]

It is the last time.

[Pete Wishart]

Would the Tories not have a lot more credibility on this issue if they owned up to the disaster that was Brexit? It opened us up to cheap imports, increased costs for farmers and put up barriers and obstacles to trading. Would they not have much more credibility in attacking the Government on this if they admitted that that was an absolute disaster for farming communities?

[Sir Geoffrey Clifton-Brown]

If the hon. Gentleman wants to call an Adjournment debate on Brexit, he is entitled to do so.

I was talking about the serious issue of how this farmer and many others up and down the country will be able to afford the tax—they will not. I understand that the Government have suggested that farmers should be forward-planning and gifting their farms to their children now, which would mean that they could avoid the tax in future. However, for many farmers, that is not an option.

I will take another constituent of mine, who farms near Fosse Way. He is still working on his farm at 93. He did not retire at 65 like many of us, but has kept working the long, hard days, as he did during the second world war, to ensure that we have enough food on our table. He has spent years planning to ensure that his grandchildren could inherit and take over the farming business. Instead, under this Government, his plan has gone completely out of the window, because he will have to live until he is 101 if he is to avoid the tax altogether.

The only option facing many farmers across the country is to sell off their land and stop farming. Those farmers have worked the land for generations. Their children will have seen their parents take over and will have expected to take over when they can, but now face a future of uncertainty. The Government fail to answer the question of what kind of person will buy the land when it goes on the market. It will not be the ones who have farmed the land all their lives. It will likely be foreign investors and hedge fund managers. They will not have generations of knowledge of how to work the land and will likely take prime arable land out of production, as they could possibly make more money from alternatives.

When I worked on the previous Public Accounts Committee—I urge the Minister to listen and to pledge that he will do this—I managed to obtain a commitment from the last Government that the food security index would be published in Parliament every year. Will the Minister give that pledge so we can continue doing that? That way we can see what effect the tax, the selling off of farms and taking land out of production is having and whether our food production is dropping.

I end with a plea to the Government to go back to the drawing board. I understand that a technical tax consultation on the changes is due to be published early in 2025. I urge the Government to use this time to talk to farmers and professionals across the country and find a way that will ensure that farmers such as Nigel do not lose their life’s work to the taxman. Some obvious alleviations and changes to APR and BPR would be to raise the threshold, so that more smaller farm owners and rental farmers would be exempt, and to have a longer transitioning period. That will help farmers like 93-year-old Nigel. However, the best outcome would be to reverse the policy altogether. Farming is under threat. I do not want to see the fabric of our countryside destroyed for future generations.

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[Pete Wishart (Perth and Kinross-shire) (SNP)]

I rise to support the many farmers in my constituency and the rural communities that farmers are the very heart of. I want to do something a little different in this debate and try to figure out what is behind some of the moves that the Labour party has put in place when it comes to farming. [Hon. Members: “What about Brexit?”] Believe me, I am coming to that, but I want to try to understand a little bit about the Government’s motives.

What I think it comes down to is a clumsy attempt to try to define what working people are. It is clear that farmers do not fit that bill. Even though they work 12-hour days in backbreaking conditions, mainly outdoors, right into older age, they just do not seem to fit into that particular clique.

Labour has always had an urban-centric view of our country. Everything it does in politics is viewed mainly through a metropolitan lens. Farmers have never really had a chance with this Labour Government. It should come as no surprise—I know why Labour Members shouted down the hon. Member for Mid Norfolk (George Freeman)—that someone as thoroughly unpleasant and John McTernan, Tony Blair’s former aide, would say something like farmers should receive the same as what Margaret Thatcher dished out to the miners. I think his view that we could do without our farming industry has just a little currency in the Labour party.

Labour Members would do well to be honest about these things. For our comrades on the Government Benches, farmers are simply not “one of us”. The last time we had a whole cohort of Labour Members on the Government Benches, we would mercilessly tease them that there were “nae ferms in Scottish Labour.” Two things about that quite unjust slight: first, they did not respond—they did not seem to care, it was a matter of “Whatevs”; and secondly, it was patently untrue. There were lots of farms in Scottish Labour, and there are with the cohort down here. A great number of Scottish Labour MPs represent rural and farming constituencies. But the point remains the same: they just do not care about what happens to farmers.

I think the general view is that Labour MPs do not rely on a rural farming vote—they could just about muddle through their elections without the support of the rural community. They see farming as just another business that they might find in one of their town or city centres. They understand nothing about how it is possible to be asset rich and resource poor, land values and the intimate nature of family farms, which are dependent on fixed assets to generate business and activity.

The simple fact is that this Government do not understand the rural community, or how the generational continuity of farms works. And now, loads of new Labour MPs represent rural constituencies in England. Rural Labour Members of Parliament do not tend to last all that long—they may be in for one term, or possible two terms at most. That is generally because they are forced to accept and subsume the agenda put forward by their Government. My bit of advice to them is to start thinking about the farmers and their communities, start to think about their own electoral arithmetic and try to be on the side of farmers for a change.

[Dan Norris (North East Somerset and Hanham) (Lab)]

I cannot believe what I am hearing. I am a four-time Member of Parliament for a semi-rural seat, having first been elected in 1997. The hon. Member is just talking nonsense. I have never heard anything like it.

[Pete Wishart]

I am a bit familiar with the hon. Gentleman’s electoral history—he was out of Parliament for quite a long time. It is good to see him back in his place, obviously, but he was booted out, which was basically down to his lack of interest, concern or care about what was happening in the rural community. If I were NFU England, I would be sure to put that in front of the Members of Parliament who represent rural constituencies in England.

I have a couple of bits of advice for some of the UK farmers and their representatives. First of all, Jeremy Clarkson is not their friend. He represents the part of the rural community that is so far away from the real struggle that farmers face that he may as well be in an urban Labour constituency. Secondly, farmers must be very careful of what the Conservative party is offering. Let us remember that the Conservative party oversaw the cost of living crisis, the ending of thousands of farms, and who—to come to the point made by hon. Members—brought in the absurd and economically illiterate Brexit. The Tory hard Brexit increased farming costs, introduced unnecessary barriers to markets, allowed lower-quality competitors in the marketplace and has taken billions of pounds out of the rural economy. How the Tories were able to sell this chaotic Brexit pup to so many rural communities will go down as one of the worse pieces of mis-selling in British farming.

There is a different way to do it. In Scotland, we do things differently. We are making sure that there will be a constant farm payment to farmers in Scotland. We have also put food production at the very heart of our farming policy. Today, in the Scottish Budget, as well as introducing a winter fuel payment, we will abolish the two-child benefit cap. On top of that, £660 million will be going to farmers. All the money that was kept for Government emergencies in the past few Budgets will be returned in full.

That is how the Government can support farmers. It would be good to see this Labour Government doing a bit of that in the future.