Budget: Implications for Farming Communities

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if he will make a statement on the implications of the Budget for farming communities.

I welcome the right hon. Gentleman to his place—he will make an excellent Chair of the Select Committee on Environment, Food and Rural Affairs—and thank him for the opportunity to talk about this important issue.

As the Minister for Food Security, I can assure the House that food security is national security. The Government’s commitment to supporting farmers and rural communities is unwavering. We have committed £5 billion in the agricultural budget over the next two years—the biggest ever budget for sustainable food production and nature recovery in our country’s history. We are also releasing £60 million to support farmers whose farms have been devastated by severe flooding, and investing £208 million to protect the nation from potential disease outbreaks that threaten our farming industry, food security and human health.

However, as we are all only too aware, the Conservatives left behind a £22 billion black hole in our nation’s finances—[Interruption.] Yes, you did. And this Government have had to take tough decisions on tax, welfare and spending to fix the foundations and deliver change, including a series of decisions on tax to protect the payslips of working people. That is possible only by making changes to other taxes, such as agricultural property relief, which was previously available to all agricultural property at a rate of 100%. Currently, small farms can find themselves facing the same levels of tax bills as much larger farms, despite having a much smaller asset. Twenty per cent of agricultural property relief is claimed by the top 2%; 40% is claimed by the top 7%. That is not fair, it is not sustainable, and sadly, it has been used in some cases by wealthy landowners to avoid inheritance tax. That is why the Government have announced plans to reform agricultural property relief.

The Secretary of State met National Farmers Union president Tom Bradshaw this morning. We absolutely understand—[Interruption.]

Order. Dr Mullan, I heard you before, and I am certainly not putting up with it this time. If you want to leave, do so now, because I want to be able to hear others. Do we understand each other?

Thank you. Carry on, Minister.

The Secretary of State met Tom Bradshaw this morning. We completely understand farmers’ anxieties about the changes, but rural communities need a better NHS, affordable housing and public transport, and we can provide that if we make the system fairer. The reforms to agricultural property relief mean that farmers can access 100% relief for the first £1 million and 50% relief thereafter—an effective 20% tax rate. That means that an individual can pass up to £2 million, and a couple up to £3 million between them, to a direct descendant, inheritance tax-free. Currently, 73% of agricultural property relief claims—

Order. I do not know whether you are aware, Minister, but you only have three minutes. How long will you be now? Are you coming to the end at this minute?

In 20 seconds.

Marvellous. Come on, then!

Seventy-three per cent of agricultural property relief claims are for less than £1 million. The vast majority of farmers will not be affected. They will be able to pass the family farm down to their children just as previous generations have always done. It is a fair and balanced approach that protects family farms while also fixing the public services that those same families rely on. It is part of a Budget that will restore economic stability and begin a decade of national renewal.

I call the Chair of the Environment, Food and Rural Affairs Committee.

I remind the House of my entry in the Register of Members’ Financial Interests.

Thank you, Mr Speaker, for allowing this urgent question. I also thank the Minister for his statement, but I fear that it illustrates rather well some of the lack of understanding that has brought us to this point. More than any other industry, farming relies on stability and long-term planning. That is why many people in the industry relied on undertakings given by the Secretary of State when in opposition that the Labour party in government would not change inheritance tax reliefs for farming.

Every farming business is capital-rich but revenue-poor. Those businesses also trade in a market that has been more heavily influenced by government intervention than any other. Agricultural property relief is not a loophole; it has been a deliberate policy of successive Governments for the past 40 years, designed to avoid the sale and break-up of family farms. Is that still a goal to which this Government adhere? As the NFU put it, the Government have seemingly failed to grasp

“that family farms are not just small farms, and that just because a farm is a valuable asset it doesn’t mean those who work it are wealthy.”

As the Minister will be aware, some of the figures he has just given the House have been vigorously challenged over the past few days, particularly the assertion that only one in four British farms will be affected. Will the Minister and his Treasury colleagues publish the data behind those figures? In particular, does the figure that 73% of farms will not be affected rely on the inclusion of very small holdings?

These changes will have a ripple effect across the whole rural community. Will the Government publish their impact assessment for other rural businesses? Can the Minister also explain why the Treasury has removed the ringfence around farm support to be spent in Scotland, Wales and Northern Ireland? That ringfence was introduced after the Bew review. If it needed a review to introduce it, how can it just be abolished now out of the blue?

I thank the right hon. Member for his questions, which are serious and important, as one would expect. Let me start by pointing out that until 1992, this relief did not exist. The system has existed before and people have operated differently, although I accept it has been different for the past 30 years.

Turning to the figures, I encourage people to reach for the detail—to look at the actual figures. The only thing we can go on is the claims, and the figures coming from the Treasury on claims for the last year available absolutely reflect that 73% figure. The right hon. Gentleman raises an important point about the ringfence; that point is under discussion, but I have made assurances that the devolved Administrations will be closely informed about, and involved in, what happens. These are important points, and they should be treated seriously.

I do not really care for the high-profile voices that we have got attacking a Labour Government, but I do care about the family farms in my constituency. I know that the Minister cares for those farms as well, as does the Prime Minister. I welcome the figures we have been given. However, those figures do need to be translated to our family farmers; they need to see what it is like on the ground. I would welcome a meeting with NFU Cymru and the Minister to discuss what things are going to look like for farmers, especially in Gower and the rest of Wales, where there is a completely different landscape.

I thank my hon. Friend for her contribution. Can I say how much I enjoyed visiting Wales, with the Welsh Minister, very early in my tenure? It was an important sign from this Government that we take farming seriously across the entire United Kingdom.

I share my hon. Friend’s very strong points about the importance of the family farm. What we are doing here is protecting the family farm. I have visited right around the country over the past five years, and on almost every visit, people have told me that they are concerned about people coming from outside—they often say “up London” or “down London”—with a lot of money and buying up local farmland over the heads of local people, not because they care about farming but to use that farmland for tax evasion purposes. This policy can be helpful to family farms and protect them against—[Interruption.] The hon. Gentleman on the Opposition Front Bench says from a sedentary position that it will not, but it is people from his area who have been telling me about these problems. They repeated them constantly when we were in opposition, and here are a Labour Government doing something about it.

I call the shadow Minister.

Mr Speaker,

“losing a farm is not like losing any other business—it can’t come back.”

Those are not my words, but the words of our Prime Minister at the National Farmers Union conference just last year. Over the weekend, we have heard gut-wrenching stories from farmers up and down the nation who feel completely and utterly betrayed by the measures in this Budget. I ask the Minister: why does the Secretary of State continue to say that he is proud of his family farm tax? Does the Minister realise that the vast majority of farming families are not multimillionaires? Most are cash poor and many are struggling to break even. How does the Secretary of State expect farmers, in his words, to do—[Interruption.]

Order. Can I just say to the hon. Member for East Thanet (Ms Billington) that I do not need any chuntering? Do we understand?