Inheritance Tax Relief: Farms

Sam Rushworth Excerpts

Monday 10th February 2025 Westminster Hall

[Sam Rushworth (Bishop Auckland) (Lab)]

I am here to speak up for the farmers in my constituency of Bishop Auckland, which is a Labour farming community. Farmers in my area are worried. They put their trust in us at the general election, and why did they do so? Because they had been so badly let down for 14 years and they knew that the previous Government could have done more on things like trade deals, supply chains, flood defences and crime.

Let me tell the House what farmers in my constituency are telling me. They say that they have no problem with the principle that we should be closing tax loopholes. To quote the Telegraph, they want to stop billionaires “hoovering up agricultural land”, which they know is pushing up land prices. They even support the principle of paying tax and raising revenue for the Treasury, because they know that Treasury revenue is necessary to improve the NHS and improve schools in their communities, as well as having a strong agricultural budget. They are not asking for a full U-turn, by the way; they are asking for some meaningful tweaks that will help the policy to better target the goals that it intends to achieve.

[Chris Hinchliff (North East Hertfordshire) (Lab)]

We have heard quite a few suggestions already of ways in which this policy could be tweaked or amended. Will my hon. Friend join me in urging the Minister to get Treasury officials to at least model some of those changes, to help to advance the debate in the coming months?

[Sam Rushworth]

I welcome that intervention. There are two areas in particular on which I think farmers in my constituency would like some answers. One is thresholds. Because the policy still keeps the 50% agricultural property relief, it does not actually close a tax loophole at all for the very wealthiest. My constituents would like to see the modelling from the Treasury that says that it would. Meanwhile, because the threshold is quite low, it means that sadly some of the family farms in my constituency will really struggle to pay their inheritance tax bill. They would like to see what modelling has been done around the thresholds; they are not asking for a U-turn, because they understand that it should be neutral for the Treasury, but they would be interested to know whether we could lift the threshold but go to 40% tax at another threshold. Would that better protect the small family farms and do a better job of closing the tax loophole at the same time?

Another point on which my constituents would welcome some consideration is the proposal for a clawback. Someone who inherits a £5 million farm is not a millionaire; they are the custodian of agricultural land, with a responsibility to farm it to produce food for the nation. If they sell a £5 million farm they become a millionaire, but they do not become one simply by inheriting it. Farmers in my constituency would be interested to look at the proposal, and it would be helpful for them to understand the modelling that the Treasury has done. Among that Labour farming community, there is good will for this Government on many things we are trying to achieve. That good will can be retained. There would be no shame in looking at this again.

[Andrew George (St Ives) (LD)]

The hon. Gentleman is making a very thoughtful contribution. He is clearly looking at ways in which the policy can be amended to make it more palatable to the farming community. That may be the reality that we are looking at, rather than getting rid of it altogether. Does he therefore agree that we should look at changing the transitional arrangements so that succession planning can be properly undertaken, which at present it clearly cannot, or indeed that we should look at leaseback arrangements to enable viable farms to continue?

[Sam Rushworth]

There are a variety of things that could be looked at. I met the NFU this morning and we discussed various points. I feel that these are all things that should be considered. I reiterate that I believe that the community I represent still has good will toward this Government and the intentions of this Government, but there are aspects of the policy that could be tweaked to better achieve their intentions.

--- Later in debate ---

[Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to participate in this debate, but I have a sense of déjà vu: a month ago, I stood in my place, the Minister sat in his, and we hoped that the Government would listen. They did not listen. I suppose that we should try to be optimistic. That time, apart from the Minister’s aide, there was not a single Labour MP to be found, but they are all here today. Their approaches have varied. I do not mean to rude to the hon. Member for South Norfolk (Ben Goldsborough), but in nearly 20 years in Parliament, I have never heard a speech that expressed no opinion on the subject in hand. He gets the vanilla award.

The hon. Member for Bishop Auckland (Sam Rushworth) was perhaps tentative and timid, but none the less wanted to hint that it was possible that the perfect selection of policies put forward by Labour might need a little tweak—congratulations on that. However, the award should go to the hon. Member for North Northumberland (David Smith), who was pretty clear that he does not think this policy is right and that it needs to be changed. Praise the Lord that someone on the Government Benches was prepared to come out and say so! That is what they were sent here for—not to do whatever the Prime Minister tells them to.

As I mentioned earlier, when the 2012 Budget proposed the caravan tax, which would have devastated the industry in East Yorkshire—it happens to be based there—and down the coast, because that is where caravans are deployed, we stood against it and opposed it.

[Sam Rushworth]

Will the right hon. Member give way?

[Graham Stuart]

I am delighted to see that the hon. Gentleman is going to stand up and find his inner rebel.

[Sam Rushworth]

There is absolutely nothing timid about what I am telling the right hon. Gentleman: farmers in my community were massively let down by the previous Government.

[Victoria Atkins (Louth and Horncastle) (Con)]

You voted for this policy.

[Sam Rushworth]

I do not know why the right hon. Lady keeps saying that. We have not voted on the policy yet. There was a vote against a motion that was put forward by the Opposition. It was a cynical motion that was designed to make us want to vote against it, because it was so ridiculous.

[Graham Stuart]

I am afraid that the hon. Gentleman shrunk inside his shell, and the farmers in his constituency will have heard that.

It is possible to challenge one’s Government. I said to my Whips then that the best service we could do the Government was to prevent them from doing something stupid, harmful and alienating to voters. I hope that Government Members can see that, because the Opposition cannot change this. People outside say to me, “Can we get this changed?” It is actually up to Labour MPs. They have the majority. Democracy is not about having a majority and doing what one likes. Democracy is about listening and doing what the now Prime Minister told the NFU when he said:

“You deserve a Government that listens, that heeds early warnings”.

There are one or two warnings about. Listen, change: if the Government change, four years on, no one will remember the U-turn. Whatever civil servants say—they are always very keen to stick with a policy—if it is wrong, stop doing it. And this is wrong. In the minute and 20 seconds I have left, let me say why it is so wrong. We have touched on the various elements, but I am not sure we have pulled it all together.

We have a really peculiar group of businesspeople in this country; they are called farmers. They take a return on capital—the millions they have invested in their farms—that is typically less than 1%. There is nobody that I am aware of—no business I was ever involved in—that would remotely consider continuing in an industry that paid less than 1%. These farmers take a pittance and get up at 4 o’clock in the morning for the privilege. They look after the animals and it does not matter if they are ill; they cannot carry their employment rights and go, “I’m not well, I shouldn’t have to go out,” because the cows do not care: they have to go out and look after them, and then they get less than 1% return. Those farmers, the most beneficent public-minded businesspeople in the whole country, then provide excellent food at among the lowest prices in Europe. If ever there were a business that we would not want to go and mess with, it is these—I should not say it, because I will make enemies of them.

--- Later in debate ---

[Dr Savage]

I thank my hon. Friend for a good point well made.

From waking up before the crack of dawn in the lambing and calving seasons, to often finishing the working day beyond midnight during the harvest, it is not hard to recognise the long and draining hours that farmers put in, the huge financial pressures that they work under and the toll that the lifestyle takes on their mental and physical health.

Farmers have to be able to plan for the long term, with their meteorological, financial, logistical and agricultural predictions having impacts for generations to come. Being such forward planners, and having been promised by the current Government when in opposition that there would be no change to APR, it came as a great and not pleasant surprise in Labour’s autumn 2024 Budget to hear that they would indeed be subjected to a change in inheritance tax. I thank my hon. Friend the Member for Horsham (John Milne) for his point earlier about the injustice of retrospective legislation.

[Sam Rushworth]

The hon. Member is making an excellent speech, but some of the farmers in my constituents are concerned that the Liberal Democrats have talked about a land tax and a wealth tax. Will she tell us how that would affect the farmers in her constituency and mine?

[Dr Savage]

I thank the hon. Member for his intervention, but that is not Liberal Democrat policy any more.

The Government claim they are targeting the big wealthy landowners, not family farmers, and they say that once inheritance tax allowances are taken into account, most farms will not be affected, but here is what I do not understand: on the one hand the Government are saying they need to raise money to fill a big black hole, but on the other hand they are saying most farms will not be affected by the change. They cannot have it both ways.

Likewise, the Government say that only 25% of farms will be affected, while the National Farmers Union says that 75% of farmers will be. We seem to have two parallel realities, and never the twain shall meet. Persisting with this policy is bad for our family farms, our food security, nature and future generations. I beg the Government to reconsider and have the good grace to back down on this disastrous miscalculation.