Inheritance Tax Relief: Farms
Debate between Rachel Taylor and James Murray(1 week, 5 days ago)
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The Exchequer Secretary to the Treasury (James Murray)
It is a pleasure to speak in this debate with you in the Chair, Dr Murrison. I begin by extending my thanks, as other Members have, to my hon. Friend the Member for South Norfolk (Ben Goldsborough) for opening today’s debate. I recognise his commitment to making sure that his constituents’ opinions are heard here today. I also thank all other hon. Members who have contributed to today’s debate for setting out their views.
I appreciate that some Members disagree with either the principle or the detail of the changes that the Government have announced to agricultural and business property reliefs. It is important to be able to debate this issue here today, given the public interest in this topic. I am aware of the strength of feeling, both within the room today and outside, including from the almost 150,000 people who have signed this petition. I understand, as the petition sets out, that there are concerns about the impacts of the reforms to the reliefs, particularly on working farms.
I will seek to address the points that hon. Members have raised in a moment, but, first, I would like to emphasise the fact that the decision to reform agricultural and business property reliefs was not taken lightly. It was one of many tough decisions that we had to take at the autumn Budget in 2024, given the incredibly challenging fiscal position we inherited from the previous Administration.
Rachel Taylor
Does my hon. Friend agree that, until we improve the living standards of ordinary working people, we will never drive up the profitability or sustainability of family farms? It is the Conservative party, with its Budget choices, that devastated our rural communities, and only a Labour Government will focus on improving living standards for every single person living in my constituency of North Warwickshire and Bedworth.
James Murray
I thank my hon. Friend for her intervention. She is absolutely right about the importance of repairing the public finances and supporting public services, for her constituents in North Warwickshire and Bedworth and indeed for all of our constituents across the country.
I noted that, in her contribution earlier, my hon. Friend made a point about what this Government are doing to support the profitability of the farming sector. She may have seen that, at the Oxford farming conference in January, the Secretary of State for Environment, Food and Rural Affairs set out the Government’s long-term vision. That includes reforms to use the Government’s own purchasing power to make sure that we are buying more British food, planning reforms to speed up the delivery of infrastructure, and work to ensure supply chain fairness, which will help people involved in the farming industry and more widely, across her constituency and those of other Members here today.
As I said, the decision that we took to reform agricultural property relief and business property relief was one of the difficult but necessary decisions that we needed to take on tax, welfare and spending to restore economic stability, to fix the public finances and to support public services, including an NHS in crisis. We have taken those decisions in a way that makes the tax system fairer and more sustainable.
The reforms to agricultural property relief and business property relief mean that, despite the tough fiscal context, the Government will still maintain significant levels of relief from inheritance tax beyond what is available to others. The Government recognise the role that these reliefs play, particularly in supporting small farms and businesses, and, under our reforms, they will continue to play that role.
The case for reform is underlined by the fact that the full, unlimited exemption, as introduced in 1992, has become unsustainable. Under the current system, the benefit of the 100% relief on business and agricultural assets is heavily skewed towards the wealthiest estates. According to the latest data from HMRC, and as hon. Members have mentioned, 40% of agricultural property relief benefits the top 7% of estates making claims—that is 117 estates claiming £219 million-worth of relief.
Oral Answers to Questions
Debate between Rachel Taylor and James Murray(5 months, 2 weeks ago)
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Rachel Taylor (North Warwickshire and Bedworth) (Lab)
The Exchequer Secretary to the Treasury (James Murray)
The Government are focused on improving living standards across the country, which is why growth is a key priority. If real household disposable income per capita had grown from 2010 to 2023 at the same rate as it did between 1997 and 2010, it would have been £4,000 higher last year. This Government’s approach will centre on fostering good work. The Government will reform employment support to offer more people dignity and purpose in meaningful employment. The plan to make work pay sets out a significant and ambitious agenda to ensure that workplace rights are fit for the modern economy and to empower working people and deliver economic growth. We have launched a ministerial taskforce on child poverty and updated the Low Pay Commission’s remit to consider the cost of living when making recommendations on the national living wage.
James Murray
I welcome my hon. Friend to his place. As he rightly points out, the recklessness of the previous Government has had a direct impact on his constituents’ living standards. As a new Government, we recognise that many households right across the country have faced higher mortgage costs in recent years, and we are already taking action to fix Britain’s economic foundations with a new approach to growth, with the three pillars of stability, investment and reform. Sustainable public finances are necessary for economic stability and long-term growth. The Government will therefore set out the difficult decisions needed to secure the public finances in the Budget on 30 October.
Rachel Taylor
In North Warwickshire and Bedworth, like in the constituency of my hon. Friend the Member for Chipping Barnet (Dan Tomlinson), monthly mortgage costs rose by an average of 22% in the year following the previous Government’s disastrous mini-Budget. That made life really difficult for hard-working families in my constituency. What steps is the Chancellor taking to ensure that such a devastating situation can never happen again to families in my constituency and across the country?
James Murray
I welcome my hon. Friend to her place. She is absolutely right to highlight just how much damage the Conservatives’ recklessness in 2022 caused to families in North Warwickshire and beyond. The decisions of Conservative Ministers unleashed economic turbulence that pushed up people’s mortgages and made people across Britain worse off. Our new Government will hardwire Budget responsibility into Government with our new fiscal lock in the Budget Responsibility Bill, which will make sure that the disaster we saw nearly two years ago can never happen again.