[Relevant Documents: Oral evidence taken before the Environment, Food and Rural Affairs Committee on 14 January 2025 and 11 December 2024, on The future of farming, HC 527; Correspondence between the Environment, Food and Rural Affairs Committee and the Exchequer Secretary to the Treasury, on inheritance tax relief reforms contained within the Autumn Budget, reported to the House on 11 February and 28 January 2025; Correspondence between the Environment, Food and Rural Affairs Committee and the Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs, on strategy and vision for farming, reported to the House on 11 February and 21 January 2025.]
That this House has considered the future of farming.
First, I remind the House of my entry in the Register of Members’ Financial Interests and place on record my appreciation for the Backbench Business Committee in allowing us this time in the Chamber. It might be helpful first just to explain to the House why I thought this was an important time to have a debate of this sort, and that was before I knew anything about what happened earlier in the week. The Select Committee that I chair has an inquiry titled “The future of farming”, and I had thought that this would be an opportunity for Members and others to shape the course of that debate and to contribute to the work of the inquiry. I still very much hope that is the case. I had also privately hoped that this might be an occasion when we could look beyond some of the changes that have occupied so much of the bandwidth in our political debate since the Budget, including the removal of the basic payment scheme and the changes to inheritance tax, double cab pick-ups and the ringfencing of agricultural budgets for devolved nations.
This debate is an opportunity for us to remind people just what we have got going with British farming, because there are some tremendous positives. We have the farmers here again today in Westminster, demonstrating how much they care about their industry and their community. For those who see this debate, whether in the Gallery or outside, I hope the message will go to them loud and clear that there are those of us in this House who want to see them stick at their efforts, because we are on their side, and it is worth it. Agriculture has one of the most resilient and resourceful workforces to be found anywhere. There is apparently an active debate within Government on how we make work pay and what the value of work is. If anybody wants to see the work ethic in action, they should go and spend a few days on a farm, because that is where they will see it clearer than anything.
We have heard a lot of concern in recent years about the balance to be struck between imported food and food produced domestically. Some of the trade deals were apparently underpinned by a thinking or an agenda that we did not need to produce as much or indeed any of our food domestically, and that we could rely on imports. Then, of course, Vladimir Putin invaded Ukraine and we had a rather rude wake-up call. Since then, we have seen Donald Trump back in the White House talking about trade and tariff changes. Surely those things alone should make us understand the importance of a healthy, home-grown agricultural sector. We should not be offshoring to other parts of the world our standards of animal welfare or environmental protection.
Climate change is so often held up as some sort of stick with which to beat our farmers, but there is a real opportunity. Those areas of the world from which we are importing food are also undergoing the changes that come from climate change, and they will not be as able to produce the food that they would wish to export to us in years to come. In this country, we still have a good temperate climate, which is absolutely suited to that.
Farmers in Ely and East Cambridgeshire face the threats of flood and drought, which are made infinitely worse by the climate change that my right hon. Friend is talking about, in addition to all the other challenges that farmers are facing. Does he agree that the Government should invest in rural flood management and water storage, and work with farmers to help them manage water on their farms?
I absolutely do, and my hon. Friend puts it perfectly when she talks about working with farmers. It seems that—this is as true for Governments north of the border as it is for those south of it—so much of what passes for agricultural policy is something that is done to farmers, rather than in partnership with them.
To get to the bright future that I believe farming can have, we have to get past the present. The decision to close the sustainable farming incentive scheme on Tuesday without any notice has provoked predictable and justifiable fury, but doing it with a press release that sought to present it as some sort of triumph added insult to injury. It was almost like a return to the glory days of the Soviet Union, when the Politburo would boast about their advances in meeting their targets in the five-year plan for tractor production. The Government have pulled the rug out from under farmers across England, and that comes on the back of the accelerated removal of the basic payment scheme in the Budget.
I am afraid that the Minister’s defence in the House yesterday around an uncapped budget is not adequate and does not tell the whole story. On 14 January this year, the director general for food, biosecurity and trade told the Environment, Food and Rural Affairs Committee that they had had almost 11,000 applications to the SFI, with 7,000 contracts offered. She said:
“If that continues at that scale there may come a point where the budget comes under pressure and we have to consider taking action.”
What has been happening in DEFRA since that time? The permanent secretary was open with the Select Committee. She said that future funding hinged on the spending review. How did we get from that point, where officials seemed to be warning us, to the point we got to on Tuesday, when we saw the scheme closed without notice?
The press notice announcing the closure of the SFI specified the budget as £1.05 billion capped. That is the first time I have been able to discover that that figure has been put into the public domain. Without that transparency, how on earth can farmers and their representatives possibly hope to regulate their behaviour, or know when the money will be running down and when they should be getting their applications in?
I thank the right hon. Gentleman for his excellent contribution to this debate. Do the points that he is making not underline the issue that is faced in my constituency? Given the value of land, it is being bought up by private equity firms and pension funds for use in industrial tree production or solar farms. Land is lost to food production as a result of such developments.
What the right hon. Gentleman refers to is the consequence of an agricultural policy that, despite aiming to do many worthy and worthwhile things, no longer has the concept of food production at its heart. Across this House and the different parties, we need to rebuild a consensus around getting food production back into agriculture. Climate change mitigation, nature restoration and the rest of it are all important parts of the context, but without food production at the heart of it, we will have the unintended consequences that he outlines.
I would like to take the right hon. Gentleman back to the point that he was making before he was interrupted. Earlier today, at Business and Trade questions, the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) asked what the Government are doing to assist the rural economy, but answer came there none. Is it not the case that the rural economy is interlinked and that if we damage one part of that economy—farming—we damage all of it? On the right hon. Gentleman’s point about the supply of goods and equipment to farmers, there will be so many other industries affected if this persecution is allowed to continue.
The right hon. Gentleman is absolutely right. It has to be properly understood that farming underpins everything in rural communities. To take the example of agricultural merchants and machinery dealers, these are successful businesspeople. They will be people who are part of the local Rotary club. They will have children in schools. They will be people who take on all sorts of leadership responsibilities within the community. If they cannot make their living in the countryside, we should not expect them just to sit around and wait for something to come along. Of course they will leave and the population will decrease, and we will be in a vicious downward cycle, which is the very opposite of what we need. It is also the very opposite of what a good, well-resourced and valued farming industry can provide for the country as a whole. If we are serious about the mission for growth, as the Government tell us, it has to be growth for everyone. It has to be growth across every sector and every part of the country, including rural areas and farming.
That allows me to come back to the point that I was about to make about the NFU’s confidence survey, which was published just this week. I am afraid it makes grim reading for anybody who cares about the countryside and agriculture. It tells us that 85% of landowners believe that the reforms to APR and BPR will increase their inheritance tax liability. Of those, 32% say they plan to reduce investment to mitigate the increase. The figure increases to 42% for mixed arable and livestock businesses, and to 49% for arable farms. Some 75% of employers expect to be impacted by the increase in employer national insurance contributions, 65% say they expect a reduction in profits because of the increase, and 43% expect to reduce investment to offset the additional costs. Again, that is on top of this week’s changes to the SFI and the basic payment scheme.
I would like to say quite a lot more about other aspects of the Budget, particularly the removal of the ringfence for devolved budgets, but I am reluctant to do so, given the pressure on our time this afternoon and the number of people who want to contribute to the debate. However, I have spoken about those issues before, so those who are interested in my views can refer to my previous contributions.
As the representative for North Somerset, I, like many in this debate, represent a rural constituency, and thus a great number of farmers, whom I have had the privilege of meeting on a number of occasions since July. The farmers of North Somerset have not shied away from expressing to me their wide range of concerns, going far beyond merely changes to the inheritance tax regime. From those meetings, I have grown increasingly concerned that the outcry over changes to inheritance tax in this House, and the time subsequently given to the topic, have distracted us from the more fundamental questions about the future of farming. That is why I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) for securing this debate, and for making it clear in his application that he wished to debate farming more widely than merely a discussion of the merits of the inheritance tax changes.
I start by recognising that farming is an issue that arouses great passion. We have seen that in our own constituencies during visits in the past six months, and even on the very roads that surround this building with the protests that seem to occur every other week. From conversations with farmers in my constituency, I have quickly gained an appreciation that we are talking about not just a profession, but a lifestyle and often a calling. The constituents I have met are often working the soil that their fathers, their grandfathers and the generations before them worked—in some cases, back even beyond the creation of this Chamber. It is thus understandable why there is a widespread feeling among farmers that too often this place, so distant to so many, does not listen to their needs, does not discuss the issues so pertinent to their livelihoods, and too often imposes its will arbitrarily on them. If we are being fair, I think all of us would admit that this is not a new sentiment since the autumn Budget; this goes back decades and has been directed at all parties in turn.
Does my hon. Friend agree that not only do the big six supermarkets not have the interests of farmers at heart, but two of them did not even pay corporation tax last year? It is critical to address that in this wider discussion.
I thank my hon. Friend for a worthy contribution to the debate, and I completely agree. It is fundamental that we fix some of the problems in the supermarket supply chain that are affecting farmers, and that companies pay their fair share to this country.
Farmers continue to feel the squeeze from rising prices, and I think we must strengthen the Groceries Code Adjudicator and give it real teeth, and thus empower farmers to fight back and get the fair deal they deserve. To do this, it will need to be properly resourced, and to that end I suggest that we look again at the levy supermarkets pay, which has not increased since 2018, despite a dramatic rise in prices and profits.
The farmers I have met do not shy away from telling me how much they love their profession, and how sad they are that their children do not see it as a viable future career. If we are to secure the future of farming, we must secure the future workforce, and to do that we must make farming a profitable business. Without fundamentally rebalancing the scales of power between those who grow our food and those who sell it, farming will continue to be an unprofitable venture and an unattractive career for young people. I note that the next review of the Groceries Code Adjudicator will start after this month, and like the farmers of North Somerset, I eagerly await to hear how my hon. Friends in the Department for Environment, Food and Rural Affairs intend to ensure that it is fit for the future.
The importance of farming cannot be overstated. It is vital not only for farmers, but for all our communities, our economy and our national security. Farming allows us to keep food prices as low as possible in shops and supermarkets. Farming is the foundation of the rural economy. It supports tens of thousands of jobs not only on farms, but all along the supply chain. There is no national security without the food security that home-grown farming provides.
I have known this for all my years because I grew up on a farm. I saw my family and friends work extremely hard to earn a living—getting up before dawn and sometimes working until after the sun went down—and toiling in difficult conditions away from the limelight in protecting the environment and the countryside, often with little thanks or reward. That is the story of so many family-run farms across our country. It is a story of the Borders, of Scotland and of British businesses up and down the United Kingdom.
The Labour Government are putting the huge benefits that farmers deliver at risk. The future of farming is under threat because of Labour’s family farm tax, which will only compound the damage that the SNP has already done to rural areas across Scotland. Family businesses, which have often been passed down from generation to generation, will be hit hardest by Labour’s vindictive family farm tax. These small family businesses are the lifeblood of entire communities. They support jobs in local shops, the workers who rely on their trade for their own business to survive, and the businesses that maintain their equipment and supply their farms. They are more than family farms; they are community farms, because they benefit everyone in the local area. These facts have been ignored by the SNP during its 18 years in power, and they have already been ignored by Labour within a year of its being in power.
Order. I have to introduce an immediate three-minute time limit, because I want to get everybody in on this important subject.
2:09 pm
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The frustration is that for some, this situation did not come out of a clear blue sky. It had been rumoured for some time, and it is well known that land agents, consultants and others had been quietly advising clients to get applications in to beat the deadline and the exhaustion of the pot. That is fine if a farm is big enough to employ a land agent or a consultant, but this is a busy time of year for small family farms, upland farmers and others. Those are the people who deserve and need the assistance more than ever, and they are the ones who have again been left behind.
Tom Bradshaw described DEFRA as “a failing Department”. That is strong language from a man not given to hyperbole, but the Minister would do well to take heed. In that evidence session on 14 January, we heard evidence from the permanent secretary, the director general for food, biosecurity and trade and the deputy director of policy, engagement and strategy. The Committee has not formally expressed an opinion, but it is fair to say from the informal discussions that followed that that session left few of us, if any, with the impression that it was an impressive leadership team entirely in command of their brief.
It was clear that the team understood the target and where they wanted to get to, but it was unclear how they would achieve their targets. We saw that with the various false starts and missteps on the road to the environmental land management schemes, although I acknowledge that much of the responsibility for that lies with Ministers from the previous Government. The permanent secretary called it an iterative process, which to my mind just seems to be another way for people to say that it is okay to get things wrong and to make it up as they go along. I am afraid that in the minds and eyes of farmers across the country, Tuesday’s announcement on the SFI simply reinforces that impression.
The future of farming could be bright, but we have to give farmers the confidence to invest and banks the confidence to lend. The Government have to acknowledge the damage that was done to that confidence by the Budget changes, especially in relation to agricultural property relief and business property relief. Anecdotal evidence has been growing for months. We have seen the closure of agricultural merchants and machinery dealers, and we have seen the number of first registrations of tractors fall. This week, we have the publication of the National Farmers Union’s confidence survey.
A small silver lining is to be found in the debate on APR and BPR, because it has forced us to think about the extent to which farming produces such a spectacularly poor return on capital. This is something we have all known for years, but now we have been forced to ask ourselves why it is the case. The hard fact of the matter is that 80 years of Government interference in the food market through agricultural subsidies has had the unintended consequence of keeping farmers poor and making supermarkets rich. I have a ten-minute rule motion next week to encourage the Government to introduce meaningful regulation in the food supply chain, and the Minister and his colleagues have recently spoken about their intention to see farm incomes increase. That is to be welcomed, but it will need a much more comprehensive and coherent strategy than we have seen thus far.
Not all confidence is about finances. We have seen a lot of doubt thrown into every sector of agricultural production in recent months because of the biosecurity threats that face this country. The poultry sector has been hit hard as a consequence of avian influenza. We have seen foot and mouth outbreaks on the continent. We see African swine fever moving across the continent, and it seems likely that we will see bluetongue disease back in this country soon. The vets on the frontline—those in the Animal and Plant Health Agency—do a remarkable job, and we owe them all a debt of gratitude, but so much more needs to be done.
The Environment, Food and Rural Affairs Committee has heard evidence on this issue from port health authorities, local authorities and the APHA itself. We have asked the Department about the point at which Government software systems were updated to stop animal products coming from Germany, following the identification of a foot and mouth outbreak there. Despite getting answers to our letters, we have still not been told by the Department whether IPAFFS—the import of products, animals, food and feed system—was updated on 10 or 16 January. That is something that the Government should be able to tell us.
I have sympathy for the Government, because they are dealing with a brand new system. Essentially, we should be able to see this as a pressure test on it. If the system did not work perfectly everywhere, let us identify those parts where the pressure escaped. But in order to do that, we need more transparency and more candour from Government Departments. If the Minister can answer that question when he responds to the debate, I will be enormously grateful. If he cannot, it would assist the Environment, Food and Rural Affairs Committee greatly if we were able to get that answer in correspondence.
Time really is against us this afternoon. I would have loved to have the rest of the afternoon, but we do not. I will conclude my remarks, but let me say on behalf of the Environment, Food and Rural Affairs Committee that I very much hope that Members from across the House will continue to engage with our inquiry, because if food security is national security, as the Prime Minister keeps telling us, then our Committee is one of the most important Committees in this House.
I want to use my speech to talk about an issue that may not be grabbing the headlines currently, but which, from discussions with farmers in my constituency, I believe constitutes the greatest impediment to a thriving farming sector. A concern I hear again and again, no matter the product a farmer may choose to specialise in, is the excessive power of supermarkets in contract negotiations and the raw deal farmers get as a consequence. Too often, farmers I have spoken to have been subject to a “take it or leave it” negotiating position from these mega-corporations, which are able to dictate price and impose unfair conditions on farmers. Many farmers I have spoken to have had perfectly edible crop rejected due to minor aesthetic defects, excessive delays in payments and indeed, as some have told me, even instances of entirely arbitrary cancellations of orders with no reason given. The fear of retaliation keeps many of these instances from seeing the light of day, and that fear has arisen due to the oligopolistic nature of the supermarket industry.
In the flow from farm to fork, the supermarkets act as a great gatekeeper, siphoning a cut from the passing traffic. While this issue is not unique to the UK—after all, a mere five companies control 80% of the global trade in grain—I think it fair to say that in recent years our constituents have become increasingly aware of the greedflation they see reflected every day in the increases in the prices they pay for food in supermarkets. These increases in prices are not benefiting the hard-working farmers who produce that food, but rather the shareholders, which are often not even based in the UK. Last year alone, we saw the big four supermarkets increase their profits by 97%, while farmers felt the continued squeeze from rising energy prices, rising fertiliser costs and rising labour costs—to name but a few things. If we are serious about improving the lot of farmers in this country, I think this is where we need to focus our attention and our efforts.
What does the future of farming look like once Labour brings in its family farm tax? The National Farmers Union estimates that hundreds of farms will face collapse because of this tax, and future generations will be denied the chance to farm their family’s land. If their farms do not need to be sold, farmers will still be discouraged from investing in their properties because that would only increase the tax their children will have to pay, and they may feel the need to save cash to cover future tax bills.
What will happen is that Labour will force farmers to sell their family businesses, our countryside will not be maintained to the same standards, the same volumes of high-quality food will not be produced, our environment will suffer as more foreign food has to be imported, other rural businesses in the supply chain will suffer from the decline in investment and ongoing trade, and food prices in shops and supermarkets will rise. In the end, Labour’s family farm tax will not just harm the future of farming, but the future of the economy and the cost of living for us all.
In conclusion, if the Labour Government were serious about supporting farms, they would listen properly to farming communities. They would listen to the single biggest thing that farmers in our country are demanding, which is to scrap the family farm tax, and restore the exemptions of APR and BPR. That is the only way to secure the future of farming. The Government should do the right thing, and scrap the family farm tax.