Future of Farming

Sarah Smith Excerpts

Wednesday 4th December 2024 Westminster Hall

[Sarah Smith (Hyndburn) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Roger. I grew up in a rural community as well, and I know how hard farmers work. I know how long it takes for generations to pass on the expertise involved in managing and cultivating the land. It is not like any normal apprenticeship or training programme; children learn over decades how to get the most out of the land, how to get the best yield and how to manage the ever-unpredictable set of circumstances that any year on a farm may bring.

However, I suggest that the last thing farmers need right now is the scaremongering that has been undertaken by the Opposition parties; they are protecting the vested interests of wealthy landowners. It is not just a minority of these people who are buying up the land; 50% of our farmland is being bought up by them, and they are on record saying that they are seeking it to avoid inheritance tax. That is the issue we are taking on. The average farmer in my constituency in Hyndburn has nothing to fear. When we look at the numbers in detail—unfortunately, I do not have the time to offer them—they show that those farmers are protected from the tax. The average farmer, even when we look at arable land values and some of the higher-value land, will not be impacted by the tax.

We have to acknowledge the challenges that some farmers face and the rural poverty in this country—we talk about it a lot and it is very real. But that is not the fault of the current policy; it is the result of decades of failure, and particularly of what happened in recent years under the previous Government, who failed to grasp how to support farmers to be more productive, so that they can earn the money they ought to be earning.

[Jim Allister (North Antrim) (TUV)]

The hon. Lady says that 50% of those affected are people who invest in land not for farming; is not the answer to put 40% inheritance tax on them and 0% on the real farmers?

[Sir Roger Gale (in the Chair)]

Order. I should have said—I did not, but I will now—that if any Member chooses to intervene, which they are quite entitled to do, I shall treat that as a speech, so they will not get called later in the debate.

[Sarah Smith]

A farming survey shows that the farmers we are speaking about make an average profit of £96,000 per year, which means that even those who are impacted will not be subject to the same level of inheritance tax as many people on similar incomes. They face half the rate of inheritance tax, and through gifting they can avoid that if they undertake the necessary planning. They can of course still protect their farmhouse—that concern is sometimes raised—through the way the system operates. We have to keep coming back to the point that at least 75% of farmers will not be impacted by the measure.

Our Government have an ambitious plan for our farmers. They will invest £2.4 billion in farming next year to focus on sustainable food production and protecting nature. They are getting £60 million out the door through the farming recovery fund and have committed to providing a further £208 million to prevent the collapse of our defences against disease threats—

[Sir Roger Gale (in the Chair)]

Order.

--- Later in debate ---

[Mr Lee Dillon (Newbury) (LD)]

It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate the hon. Member for Upper Bann (Carla Lockhart) on securing this important debate. Farmers are the very foundation of rural communities the length and breadth of the country. They put food on our tables, steward our countryside and sustain rural communities. Farming is more than a profession; it is part of Britain’s identity and, as the hon. Member said when opening the debate, something that is worth protecting.

I have the privilege of representing many farmers in my Newbury constituency, who are vital to our local community and our way of life. Farming is a uniquely slow-moving industry, heavily influenced by seasonal uncertainties. In such an unpredictable landscape, scaling up operations becomes essential for achieving profitability. Yet, despite those mounting pressures, successive Governments have failed to support our farmers. I am sure that Labour Members—

[Sarah Smith]

Will the hon. Gentleman give way?

[Mr Dillon]

I will not give way.

I am sure that Labour Members never expected to vote for small farms to close or to be swallowed up by large landowners, but that is what will happen as a result of this policy. In 2022-23, the Conservatives underspent the promised funding to farmers by £227 million and failed to adjust England’s farming budget to keep pace with inflation. Labour’s manifesto made no mention of the agricultural budget, signalling from the outset that this Government do not prioritise protecting our farming industry.

The changes to agricultural taxation in the recent Budget represent yet another blow, threatening the future of small-scale farms and rural communities across the country. While I understand the challenges that the Government face due to the black hole left by the previous Government, they do not excuse the recent decisions to impose such harsh tax burdens on vital industries.

The Government claim that only 27% of farms will be affected by the changes. That equates to 55 farms in Newbury, similar to the number for my hon. Friend the Member for Chichester (Jess Brown-Fuller), but that figure is based on His Majesty’s Revenue and Customs data from 2021-22 and risks significantly under-representing the true impact. The NFU warns that, in reality, around 75% of commercial family farms will exceed the £1 million threshold, making them subject to this tax change. The Liberal Democrats are deeply concerned that this will impact family-run farms, pricing out young farmers from the industry, as well as other rural businesses that rely on the farming economy.

Additionally, over the last week, the Government abruptly paused the capital grant scheme, a crucial resource for funding sustainable farming projects. It is vital to allow farmers to carry on their work, which is essential to public safety, including managing floodwater and storing slurry safely. It is incredibly concerning that the Government have decided to freeze that scheme without warning, and even more concerning given that the Government have made cuts to the basic payment scheme on the basis of expanding environmental grants to farmers. On top of those cuts, farmers have seen their input costs rise sharply in recent years, yet the price they get for their produce at the farm gate has fallen.

I too recently met with farmers in my constituency; during that meeting, one farmer shared that he has worked his land for many years and was looking forward to this year’s being the first ever where he was able to make a profit. He calculated that, effectively, his hourly wage as a farmer is just £6.22 an hour—half the national minimum wage. Another farmer shared that only 15p of every £1 spent on agricultural products actually goes back to farmers, which highlights the tight margins in which they operate. According to Riverford Organic Farmers, 61% of farmers in the United Kingdom fear that they could be out of business in the next 18 months as a result of this Labour Government’s proposal.

Farmers are at the forefront of protecting our natural environment, but it is extremely important that we provide them with the support they need to ensure that they can continue their work. We look to the future of farming; it is vital that the Government do not make the same mistakes as their predecessors and undervalue rural communities.

In conclusion, I urge the Government to raise the farming budget by £1 billion, as outlined in the Lib Dem manifesto, to renegotiate those trade agreements to protect British farmers and to strengthen the Groceries Code Adjudicator to ensure that farmers can keep farming in fair circumstances. It is essential to our country—it is vital—that we protect farmers at all costs. The Government’s proposed changes threaten the future of farming and place undue pressure on this critical industry.

I am proud to represent so many hard-working farmers in Newbury. I, and my Liberal Democrat colleagues, will continue to fight tirelessly to ensure their survival and success for generations to come.

--- Later in debate ---

[Dr Hudson]

I will not give way, I am afraid.

Hon. Members will all be aware of the ongoing situation with bluetongue virus, avian influenza, bovine TB and other diseases, of threats from outside the UK, from African swine fever to foot and mouth disease, and of the challenges that they pose to our livestock farmers, our economy and our national security. As I said this morning in this Chamber, biosecurity is national security. While I note that the Government have chosen to allocate £208 million for the transformation of the Animal and Plant Health Agency HQ in Weybridge, I urge the Minister to make representations to the Treasury to ensure that that HQ is funded in full. In 2020, the previous Government rightly committed £1.2 billion to start that off, but now we need the further full £1.4 billion to complete that critical national security measure.

It is vital that we also make use of new technologies to further build our national resilience against livestock disease, and to protect human, animal and plant health. The Genetic Technology (Precision Breeding) Act 2023, brought in by the Conservative Government, will help with that, in terms of disease resistance in plants and animals, and climate-resilient crop development. Likewise, wider innovation in machinery, horticulture, farming practices and sustainability are all positive processes.

The elephant in the room today is family farm tax, and we cannot have a debate in which we do not include it.

[Sarah Smith]

Will the hon. Gentleman give way?

[Dr Hudson]

I am not going to give way, I am afraid. That tax hits at the heart of future thinking in farming, taking aim at the bond between farming parents and their sons and daughters, and punishing farming families who have worked their land for generations for acting in the best interest of their children and grandchildren, and of our country by looking after our environment and feeding our nation.

What possible incentive can there be for sustainable, thoughtful farming or for improving the productivity of a field, flock or herd when, after a farmer has passed, the farm will have to be broken up to pay that unfair inheritance tax?

There have also been, as we have heard today, worrying developments in the Government’s approach to capital grants. Those vital lifelines, which make possible the wider environmental objectives of the environmental land management schemes, have for some bizarre reason been suspended by the Labour Government, with no warning or phase-in period. Farmers want to be able to deliver food for our country in an environmentally friendly way, but that will only be possible if the Government of the day, of whatever political colour, is prepared to support them on that journey. The slashing of those grants is another hugely damaging development in relation to future impact on our farmers, which is what we are considering in this debate.

We must clear away the dark clouds of the ill-judged, short-sighted Labour Budget, in particular the heartless family farm tax, which will damage food security, hollow out rural communities and deeply impact the mental health of the people living and working in those sectors. The Government must start listening now. They must reverse this awful tax, and we must help our farmers to see some sunlight on the horizon.

In conclusion, biosecurity is national security. Food security is national security. The Government must start listening and actually look after the communities that nurture those critical factors for our country. I urge them to consider what they are doing and to do the right thing.