Bank Closures: Rural Areas
Wendy Chamberlain Excerpts(1 day, 13 hours ago)
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Simon Hoare
I agree. I will certainly come on to what I am asking the Government to consider, but the hon. Gentleman is right to talk about social isolation. We have lost 14 banks in my constituency since 2015. In 440 square miles, we have five banks remaining. We have had a fall of 74%. Across the county of Dorset, which includes the major conurbations of Bournemouth, Christchurch and Poole, we have had a decrease of 68% overall, with 101 branches closed and only 48 remaining in the whole of the county. Eight parliamentary constituencies are served by just 48 banks.
My constituent Deborah Jones made a good point in response to a recent announcement by Lloyds that it is closing its branch in Blandford Forum, a market town in my constituency with a large village hinterland. With the exception of Nationwide, it now has no proper, traditional high street branch.
Wendy Chamberlain (North East Fife) (LD)
The hon. Member mentioned Nationwide. My understanding is that 142 towns in the UK do not have a bank, and many are left only with a building society. It seems that the banks have exited while the building societies have stayed behind. I would appreciate his thoughts on what that says about the lack of community cohesion as a result of losing those banks. Often we are losing post offices at the same time.
Simon Hoare
The hon. Lady is right. She allows me to pause to pay tribute to the Post Office and to members of the Association of Convenience Stores, which have stepped in to provide some level of service in those areas where the banks have gone. That brings me to one of my key asks of the banks, and the Minister as well. Yet again, a rubric seems to be used to argue in favour of closures that is blind to whether it is an urban or a rural setting. That differential needs to be taken into account.
Simon Hoare
The hon. Gentleman is absolutely right. In many respects—[Interruption.] I am beginning to get paranoid; I hear voices. He is absolutely right to make the point that he does. I pay tribute to how the Post Office has stepped up. Very often, in providing that sort of transactional bank service, it has supported the continuance of rural post offices, which can often be marginal and fragile businesses themselves. Again, I think it an easy crutch to lean on to say, “Well, of course, the post office does this.” We can all applaud what post offices do, but customers cannot use them to talk to someone from their bank to discuss their overdraft, loan, mortgage, business credit card maximum or whatever it may happen to be.
I say to the Minister that we want our local businesses and small and medium enterprises to flourish—small, micro and family-owned businesses are very much the hallmark of a rural economy—and they have the greatest need, on a more regular basis, for that relationship with their banks. Then, the banks know the nature of the business and its long-term viability, and they can build that relationship.
Wendy Chamberlain
I am grateful to him for giving way a second time. He is making an important point. One of the things that I have always found interesting is that when a bank has closed in North East Fife, it offers to deliver not an access-to-cash service but some kind of pop-up banking advice service in the constituency. That suggests to me that banks know very well that giving banking service advice is important. Instead of doing it as a sop for a number of months before giving up, they need to do it on a more regular and permanent basis.
Simon Hoare
The hon. Lady is again absolutely right. Surely it makes good commercial sense for high street banks, as we used to call them—increasingly, they are not particularly high street banks—to be able to tout their wares to existing or potential customers. That is how to generate business: by having a presence. A hub makes a very good presence for them all, but they seem to move at the speed of the slowest, and if one is not particularly convinced, the whole thing sort of seems to fall down. I know that the Government are trying to do more on that, but I think they could do even more to turbocharge it.
Inheritance Tax Relief: Farms
Wendy Chamberlain Excerpts(2 weeks, 1 day ago)
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Wendy Chamberlain (North East Fife) (LD)
It is a pleasure to serve under your chairmanship, Dr Murrison.
Today, farmers are descending on Whitehall for the third time in as many months. All Members present here, I suspect, know that the Government’s proposals to change APR—and BPR, which we must not forget—have been an exercise in failure: a failure in political judgment and in communication. Based on the latest OBR analysis, they will not even achieve their policy outcomes.
A number of Members have suggested different ways of mitigating this impact, but I point out that there was a report about the half a billion in additional costs to HMRC spent on recouping tax. Funnily enough, that is the same as the £500 million that it is estimated this policy will bring into the Treasury, so perhaps we need fewer loopholes, simpler tax and a way to help working people in this country.
I want to raise an issue mentioned by a number of Members, including the Chair of the Select Committee, my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), about agricultural tenancies and their impact particularly in Scotland. Agricultural tenancies have an inheritable value; there are circumstances in which a tenancy can be passed on via a will, the rules of intestacy or, in some conditions, as a lifetime gift. It is not purely a Scottish occurrence, but it is many times more common in Scotland, because of the Agricultural Holdings (Scotland) Act 1991. Any tenancy to which that law applies can be passed on by the tenant as part of their estate.
The tenancy is valued per acre according to the difference between market rates and the actual rent, because these tenancies have much lower, preferential rates. According to the CAAV— I know it has written to the Chancellor about this, and I am grateful for its explanation—that means the average value of lowland arable land, for example, would be £3,000 to £4,000 per acre. Therefore, a tenancy of 300 acres breaches the APR threshold and starts paying APR—and that is before taking into account the value of machinery.
Although we have heard broad concerns about the future of farms if they are forced to sell land piecemeal, that just is not an option available to tenant farmers. This is complicated and technical, but I think the Government just have not thought about the impact on Scottish tenant farmers. I have raised this four times in the last three months, both at Scotland Office questions and in the urgent question that the Minister replied to a couple of weeks ago, and I got platitudes. I do not think they have looked at this at all.
I am conscious of the perception that farmers are wealthy. We have made it clear today that this debate is about people who have cash held in their land, but cannot release that without selling it. A constituent I spoke to last week is a farmer, previously a tenant farmer; she bought her farm eight years ago with her family, under a mortgage, and is now transitioning from working tax credits to universal credit. We need to deal with that myth, and I urge the Government to pause this policy.
Sarah Dyke (Glastonbury and Somerton) (LD)
It is a pleasure to serve under your chairmanship, Dr Murrison, and to speak on behalf of the Liberal Democrats on this incredibly important issue. I thank all right hon. and hon. Members for their contributions, which highlight clearly the strength of feeling from around the country. I also thank the people who signed the petition, especially the 520 from Glastonbury and Somerton.
As has been well rehearsed, British agriculture is staring over a cliff edge. It has suffered from an almost never-ending list of difficulties over recent years: Brexit, energy prices, the war in Ukraine, the terrible Tory trade deals and a botched transition from BPS to ELMs. Against that background, the Government’s decision to implement changes to APR and BPR has rightly drawn criticism and anger from across the sector. The Liberal Democrats are deeply concerned about the impact that the family farming tax will have on farmers and rural communities right across the country.
I am in constant dialogue with farmers from across Glastonbury and Somerton. A consistent message from many is that this decision will inevitably lead to many family farms closing their gates for the very last time over the next few years. Just this weekend, I met a farmer’s son, who is in his 40s, on his family farm in Low Ham. He explained that he hoped to move away from his career as a civil engineer and go back to the farm full time, keeping the beef suckler herd at the heart of the business but introducing diversification projects to maintain a baseload of income for when agricultural markets fluctuate. He told me that the changes to IHT
“will be the end of any chances we have of keeping our farm going. I feel totally demoralised.”
Wendy Chamberlain
My hon. Friend is outlining the impact of this policy. The example that she gave about her constituent reminds us that there is a multigenerational element to farming, and families often live together. The Government have said that farmers should consider tax planning, but one challenge with tax planning is that a donor cannot keep any benefit from a gift. Do we think the Government intend to suggest that older parent farmers who tax plan need to move off the farm?
Sarah Dyke
I thank my hon. Friend for a very well made point, and farming is indeed often multigenerational. This is putting huge stress on farming families. I myself am from a farming family. My mother is 81, and my father died about a year ago. The pressure that it is putting on her to think about whether she can survive another seven years is so distressing, and I know that she is not alone.
James Murray
I have only a few minutes left, so I will not.
I have also participated in several meetings with farming bodies since the autumn Budget 2024, and I am meeting farming bodies again shortly to discuss their concerns further. At the same time, it is important to recognise that other organisations have called for the reliefs to be abolished or restricted. Commentators have highlighted that the reliefs currently contribute to an inheritance tax system that means that the very largest estates pay lower effective tax rates than smaller estates. As the Institute for Fiscal Studies has set out since the Budget, the changes we announced will still leave farmland much more lightly taxed than other assets.
I want to address as many of the points that Members made during the debate as possible, but it is worth saying first that it is important to see the changes in the context of wider support for farmers and the rural community. The Budget committed £5 billion to farming over the next two years, including the biggest budget for sustainable food production in our history. It committed £60 million to help farmers affected by the unprecedented wet weather last year, and we are protecting farms and rural businesses by committing £2.4 billion over the next two years to rebuild crumbling flood defences.
We will also continue to provide existing support for the farming industry in the wider tax system. That includes, for example, the exemption from business rates for agricultural land and buildings, and the ongoing entitlement for vehicles and machinery used in agriculture to use red diesel, as the hon. Member for Dumfries and Galloway (John Cooper) mentioned.
On the point made by the right hon. Member for Orkney and Shetland (Mr Carmichael) about the inheritance tax treatment of Scottish agricultural leases, the Government are aware of the issue and officials have already discussed it with their counterparts in the Scottish Government. There is an existing provision in the Inheritance Tax Act 1984 that deals explicitly with the Scottish agricultural leases. Section 177 of the Inheritance Tax Act means that Scottish agricultural leases passed down on death are not included in the value of the estate.
James Murray
I have only a few moments, so I will not.
My hon. Friend the Member for North Northumberland (David Smith) asked about introducing a working farmer test. I draw his attention to the fact that a test where relief was provided only if, among other things, the individual received 75% of their income from agriculture did exist in the UK for a short period, between 1975 and 1981. It was removed, however, because of concerns about its impact on the availability of land for tenant farming.
Finally, I will address an issue raised by a number of Members, including the hon. Members for North Cornwall (Ben Maguire) and for Chester South and Eddisbury (Aphra Brandreth), about mental health among the farming community. The Government are committed to supporting farmers and agricultural workers in accessing the support they need to protect their mental health. DEFRA already works with a range of farming charities including the Royal Agricultural Benevolent Institution and Yellow Wellies, which was mentioned by the Liberal Democrat spokesperson. Those organisations have highlighted the mental health challenges for farming communities more generally.
To conclude, as we have heard, the reforms to inheritance tax generate strong views, and I understand that. I recognise that a small number of estates will have to pay more tax, but the reform of the reliefs is necessary given the fiscal challenge that confronts us and the fact that the bulk of the cost of the reliefs had become skewed towards the wealthiest estates. We must put our public finances back on a stable footing and repair our broken public services. We are doing so in a way that involves tough decisions but is as fair as possible and preserves significant relief from inheritance tax for small farms and businesses.
Agricultural and Business Property Reliefs: OBR Costing
Wendy Chamberlain Excerpts(1 month ago)
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James Murray
The comments in the OBR publication yesterday about older individuals reference a point that has been made since the Budget in debates in this place and elsewhere. We have pointed out that our reform of agricultural property relief and business property relief maintains generous exemptions from inheritance tax; £1 million is subject to relief, and there is the 50% relief beyond that, the existing nil-rate bands, and other exemptions in the system.
Wendy Chamberlain (North East Fife) (LD)
Unusually, in Scotland tenant farms can be passed down as inheritance. I have been asking the Treasury whether it has made an assessment of the impact on such farms, given that their farmers cannot sell land to meet the APR liability that they might face. So far, the answer appears to be that there is no assessment, so I ask the Minister for an answer from the Dispatch Box: is he aware of agricultural tenancies under the Agricultural Holdings (Scotland) Act 1991, and has he made an impact assessment?
Oral Answers to Questions
Wendy Chamberlain Excerpts(3 months, 3 weeks ago)
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Rachel Reeves
I recognise the importance of being able to pass on to the next generation the assets people have built up, and we will be setting out more details on all of our tax policies in the Budget tomorrow.
Wendy Chamberlain (North East Fife) (LD)
Shared prosperity funding has been used by local authorities such as Fife council to drive economic growth, particularly through support for small businesses. That funding is due to end in April 2025. Can we get a commitment from the Government that funding for these kinds of schemes will continue?
Rachel Reeves
We will set out more details in the Budget tomorrow, including the consequentials that will go to the Scottish Government.
Oral Answers to Questions
Wendy Chamberlain Excerpts(5 months, 3 weeks ago)
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James Murray
I am disappointed that the hon. Member is talking down essential investments that we have made in our country’s future. She also seems to be confused: there is a £22 billion black hole because of the unfunded spending commitments made by the Conservative party when it was in government. But she makes an important point about protecting pensioners, which is why it is so important to ensure that all those pensioners who are eligible for pension credit take it up, and I look forward to her support in making sure that they do so.
Wendy Chamberlain (North East Fife) (LD)
Statistics from the Trussell Trust published today show that half of people on universal credit ran out of money and could not afford to buy food before the end of the month. What prospect do those people have of an increase in their living standards? The reintroduction of the household support fund is welcome, but what steps is the Treasury taking to make sure that people do not go hungry this winter?
James Murray
As the hon. Member rightly points out, the Government are providing £500 million to extend the household support fund in England for another six months, and that will include Barnett consequentials. That is an important measure to help people in the months ahead, but the crucial way to increase people’s living standards and tackle the cost of living crisis in the longer term is to get the economy growing. We have spoken at length about the measures that we have already taken as a new Government—from planning reform and the national wealth fund to Great British Energy. All that is about getting the economy growing, because that is the sustainable way to make people better off and to invest in our public services.
Public Spending: Inheritance
Wendy Chamberlain Excerpts(6 months, 3 weeks ago)
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Rachel Reeves
I think every single Member of the House will have faced often very difficult constituency casework about young people who are not getting a diagnosis on time and not getting the support they need at school. We will set out all our spending plans and priorities at the spending review later this year.
Wendy Chamberlain (North East Fife) (LD)
I welcome the Chancellor of the Exchequer and her team to their place. I am concerned that I have not seen anything in the Chancellor’s statement or the accompanying report on the 1950s women who suffered maladministration of their pensions. The Parliamentary and Health Service Ombudsman, which we all utilise when doing constituency casework, was clear that maladministration was suffered. Could the Chancellor confirm whether she is considering the report and will she provide a statement before the Budget on 30 October, or is the message to WASPI women today that she will not do it?
Rachel Reeves
My right hon. Friend the Work and Pensions Secretary is considering that report as we speak.