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Farming and Inheritance Tax

Volume 758: debated on Wednesday 4 December 2024

I beg to move,

That this House regrets that the Government has undone its promises to farmers, and is seeking to punish them with Inheritance Tax bills of hundreds of thousands, or even millions, of pounds by cutting Agricultural Property Relief and Business Property Relief; further regrets that the Government has provided conflicting information on the number of farms that will be affected, and has not conducted an impact assessment of this approach; notes that figures from the National Farmers’ Union suggest that some three quarters of farms will be affected; further notes that farmers tend to be asset-rich but cash-poor and that figures from the Country Land and Business Association suggest the average arable farm will have to sell 20% of its land to pay the Inheritance Tax bill that this policy will cause; notes that the Central Association of Agricultural Valuers anticipates that this will affect 75,000 owners of farming businesses over a generation; notes also that this land is not guaranteed to be used for food production if sold; and calls on the Government not to impose the cuts to Agricultural Property Relief and Business Property Relief set out in the Budget that will lead to the end of family farming as it has been known for many generations in the UK.

This Government have driven farmers to despair. The hike in national insurance, the acceleration of delinked payments, the fertiliser tax, the double cab tax, the stalling of capital grants, the scrapping of the rural services delivery grant and the slowing down of applications to farming schemes are all conspiring against our rural economy and the survival of British farms. Yet the Government have added a death tax to that: the family farm tax, which is seeing families across the United Kingdom worry about whether they will be able to hand on their farms to their children, as generations before them have done.

In the 36 days since Labour’s Budget, the Chancellor, the Secretary of State and Ministers have tried to justify their family farm tax, which will break up family farms, by claiming that only 500 farms will be affected each year. Awkwardly, the figures used by the Chancellor are contradicted by figures produced by the Department for Environment, Food and Rural Affairs. The left hand does not know what the far-left hand is doing. When the figure was queried by the National Farmers Union, the Country Land and Business Association, the Tenant Farmers Association, farmers across the United Kingdom and us Conservatives, Ministers told us all rather patronisingly that we did not understand and that farmers should seek professional advice. Well, farmers have sought professional advice, which has revealed just how badly wrong the non-economist Chancellor has got her numbers.

In a moment.

Since the Budget, the Central Association of Agricultural Valuers has analysed the family farm tax and applied tax law and the realities of modern-day farming to it. Its analysis has revealed that up to 75,000 individual owners of farming businesses could be affected over the coming generation, even before inflation, which is the equivalent of five times the Government’s figure of 500 farms affected in 2026-27. How could they have got this so wrong? It is because this city-dwelling Chancellor, Secretary of State and Exchequer Secretary do not understand modern farming or the countryside that they have overlooked a major area of tax policy and forgotten to consider thousands of farmers.

As the Exchequer Secretary has confirmed, the Government forgot to include one of the three routes to the relief in their calculations. They have not included business property relief-only claims in their figures, which means that as many as 14,000 tenant farmers who cannot claim agricultural property relief because they do not own the land on which they farm are absent from their calculations. What is worse is that Ministers do not know how many farmers are affected by that.

The city-dwelling Chancellor and Secretary of State have also forgotten about the farmers who in years gone by followed professional advice and transferred their farms into companies or partnerships. Those farmers will claim only BPR, so they have been left out of the calculations. Again, Ministers do not know how many farmers are in that position.

I will in a minute.

I am told by advisers that some farmers choose to use BPR only because it is easier in probate. Guess what? Yet again, Ministers do not know how many farms are in that position, and they have not been included.

I will give way first to the hon. Member for Strangford (Jim Shannon) and then to the hon. Member for Scarborough and Whitby (Alison Hume). I have so much more to say.

I commend the shadow Minister for bringing forward the debate. The collective decision to have this debate in the House is one that my farmers and constituents very much support. Professional legal advice sought through the Ulster Farmers Union—I must declare an interest as a member of the union—indicates that somewhere in the region of 65% of small farmers and family farms in Northern Ireland will be affected. When it comes to understanding that, has Labour really got no idea what is going on?

I thank the hon. Gentleman for intervening. The evidence is building again and again against the assurances that the Chancellor, the Secretary of State for Environment, Food and Rural Affairs, the Exchequer Secretary and the farming Minister have given the House. Frankly, the farmers outside deserve better, and so do we as Members of Parliament.

I will give way to the hon. Lady and then carry on with the calculations that the Government have got so wrong.

The right hon. Member left a trail of destruction across the Government. She was the Health Secretary who broke the NHS, the Prisons Minister who ran out of prison places and the Treasury Minister who crashed the economy—no wonder her constituency majority crashed from 28,000 to 5,000. [Interruption.] Does she not think it is time to apologise and for once to support the Government, who are bringing back stability to the British economy and farmers’ profitability?

Order. I know that Members are jeering about reading. I know that when I came to the House it was a rule that you should not read, but both sides are doing it. Remember that.

This point of order is spontaneous, unlike that intervention. [Interruption.] I am Mr Spontaneity.

Mr Speaker, you are entirely right that many right hon. and hon. Members read their speeches almost verbatim, but surely it is just rude and discourteous to the House for the hon. Member for Scarborough and Whitby (Alison Hume) to read a supposedly spontaneous intervention as if it had just come into her mind. She managed to find a typewriter and a printer in order to write down two pages of intervention.

As the first female Prime Minister said, if they are going after you personally, it means you are winning the argument.

Let me help the hon. Member for Scarborough and Whitby with the second set of calculations that her Chancellor has got so wrong, because the Chancellor’s cockeyed accounting extends to the claim that farmers will be able to transfer £3 million tax-free. That is wrong. Only a few in a specific set of circumstances will be able to claim that magic figure. [Interruption.] There are jeers from Government Members, but that amount is not available to widows, it is not available to people who are single and it is not available to people who own a farm with another relative. Labour’s magic £3 million figure assumes that the surviving spouse lives some sort of monastic existence where they have no personal effects to pass on to their loved ones. As farmers from Sussex have asked, why are widows’ families being targeted?

A family wrote to me about their mother, who is a widow. They have calculated that they face an additional £200,000 tax bill from Labour because their father died before the Budget and so did not know to transfer his allowance.

We know that some Labour Members of Parliament have concerns. The hon. Member for South West Norfolk (Terry Jermy), who represents over 500 farms—I do not know whether he is in his place—has asked for assurances on the accuracy of figures used by the Government. Given the demolition of the Chancellor’s figures by the CAAV and many others, will he vote for the family farms in his constituency or will he toe the party line?

The CAAV’s concern about the figures being peddled by the Government is shared by the Institute for Fiscal Studies, CBI Economics and even the Office for Budget Responsibility. But it is not just about the numbers: Labour Members need to understand the emotional toll of this terrible tax. It is the worry, the distress and the sense of betrayal felt by families that should stop ambitious Labour MPs in their tracks before they parrot without question the figures given to them by their Ministers.

I will give way to the hon. Lady. I hope that she does not fall into the category that I just described.

The right hon. Lady talks about the figures. Does she accept that her Government’s record was one of leaving £300 million of the farming budget unspent in the Treasury coffers, not helping farmers?

I thank the hon. Lady sincerely for raising that point, because she has—perhaps unwittingly—identified a contradiction in DEFRA’s own claims. It talks about a £300 million underspend, but last week it was cancelling the very capital grants that farmers around the country have been investing in, saying that it had run out of money. Well, it cannot be both. Perhaps that is yet another example of the cockeyed accounting of the Chancellor and the Environment Secretary.

Does my right hon. Friend agree that what is quite frightening about this policy is that perhaps the Government know exactly what they are doing, and that, a bit like “Animal Farm”, they think everything should be collectivised?

My right hon. Friend, who has a wonderful way with words, asks a question that many members of rural communities up and down the United Kingdom are asking themselves. In fact, when the Prime Minister did regional media a couple of weeks ago, Sean Dunderdale, the wonderful presenter on BBC Radio Lincolnshire, asked him what he had got against the people of Lincolnshire. I might ask: what have this Labour Government got against the countryside?

As my right hon. Friend has said, the word “betrayal” is fitting because, long before the election, pledges were given, by both the Secretary of State and the Prime Minister, that these changes would not be made.

Order. The right hon. Member is a very experienced Member of this House, and he knows that he is meant to address the Chair, not the Front Bench.

Mr Speaker, I know that you, as a man of integrity and honour, will be as disappointed as I am that the Government should promise one thing and then do the exact opposite.

It is a great pleasure to have the right hon. Gentleman not just as a friend but as my Lincolnshire neighbour. He has put his finger on the point—genuinely, it is the next paragraph in my speech.

Some Labour MPs must be haunted by the phrasing from the Secretary of State during the general election campaign—because I suspect that they repeated it up and down the market towns and villages in their constituencies—when he described fears that Labour would impose this family farm tax as “desperate nonsense”. Labour candidates will have repeated that line and assured the farming families in their constituencies that Labour would never treat rural communities in that way, yet within weeks the Chancellor was planning to do exactly that.

Since then, families across the country have been trying to work out how to pick up the pieces after Labour’s family farm tax bomb. They will not forget. A farmer from Derbyshire emailed me this week to say:

“Our hard work and investment as a family has been wiped away in the stroke of a pen.”

They went on to say:

“My 60 year old husband had a bleed on the brain in June and thankfully has made a full recovery but I’ve never seen him so stressed. He doesn’t know what to do”.

Hon. Members representing seats in Derbyshire may wish to reflect on how they will respond to that. A farmer from Northumberland has written to me as follows:

“We had to talk about which one of my parents are going to die first, in front of them.”

He said that Labour is

“destroying people’s lives with this policy. Many of us are worried about the mental state of many within agriculture and are concerned that it may be the final straw for some.”

In fairness, the hon. Member for Hexham (Joe Morris), who is in his place, has voiced concerns about whether his Government are listening to ordinary people about this. Will he vote for his farmers or will he toe the party line?

As a farmer’s wife, I understand the emotional impact that my right hon. Friend sets out so clearly. This is about not only the farmers who will be affected but all the farmers who know that they might be affected. This is a tax on tragedy, and no one knows if it will befall them.

My hon. Friend and Lincolnshire neighbour sets out exactly the personal impact of the tax. I know how Treasury Ministers look at spreadsheets and those terribly impressive packs of information from civil servants. [Interruption.] I remind Government Members that this is deeply serious; it is not a joke. I also know that Chancellor after Chancellor has looked at the figures and come to the conclusion that this is a political decision. The current Chancellor has got it wrong.

The shadow Secretary of State made an important point about the health and wellbeing of our farmers. As operation waiting times were almost three times higher when she was Health Secretary than they were in 2010, does she not welcome the investment that this Government are putting into our NHS? [Interruption.]

Do not worry; I will deal with that. I thank the hon. Gentleman for raising the important issue of mental health in farming across the national health service. I was proud to work, as a Member of Parliament and as Secretary of State for Health, to massively increase investment in mental health services. If he is a rural MP, I am sure that he will know how isolated farmers can be and the pressures on their emotions at the best of times—they have the weather, diseases and crop cycles to contend with. This pressure merely adds to that, as we have already heard from farmers who have contacted me.

I also gently remind the hon. Gentleman that the family farm tax—or tax on tragedy, as my hon. Friend the Member for Sleaford and North Hykeham (Dr Johnson) called it so bleakly—will raise £500 million in 2026-27. According to the King’s Fund, that is equivalent to about a day’s worth of services in the NHS in England. It will not be quite the game changer that some in the hon. Gentleman’s party believe it to be.

What about the family in the south-west whose beloved father died a decade ago in tragic circumstances, leaving three young children who are now in their teens? The mother has run the farm and brought up their children in the midst of their grief. She has now been diagnosed with a life-threatening illness at the age of 50. Two of the children want to carry on the farm when they reach 18 but, should the unthinkable happen and they lose their mum, they will be saddled with Labour’s family farm tax of £700,000. What empathetic and meaningful response does the Secretary of State, who is not in his place—where is he?—or the Treasury Minister have for that family? They will be watching and listening.

We took the unusual step of giving lots of notice to Labour MPs that we would debate Labour’s family farm tax today. We did that because we wanted to give Labour MPs in rural seats time to reflect and consider whether they can continue to support this vindictive tax. For example, a Welsh landowner told me that he will have to sell six tenanted farms to pay Labour’s family farm tax. That is six farming families—who we on the Opposition Benches would describe as working people—who will lose their businesses, their family homes and their children’s farming futures. Those six farming families have been forgotten by this Government.

The hon. Member for Montgomeryshire and Glyndŵr (Steve Witherden) has called on the Treasury to produce its modelling on the impact on family farms. Will the Treasury do that, at the Back Bencher’s request? How will he vote today? The hon. Member for South East Cornwall (Anna Gelderd) met farmers earlier this month and claimed that she would take their concerns back to Westminster. Will she raise those today and vote against this tax?

I have consulted widely with farming communities and farmers in my constituency. I have not been able to identify a single farmer who feels that there is anything good in this policy whatsoever. Does my right hon. Friend know whether there is a single Labour Member of Parliament representing a rural community who genuinely believes that they will be voting in their constituents’ interests tonight?

I sincerely thank my right hon. Friend for setting out clearly the choice ahead of Members across the House. We on the Opposition Benches know who we are standing up for. We back our farmers. We understand how difficult farming is as a way of life. It will be for individual Members of Parliament to decide how they vote.

The right hon. Lady talked about choices and backing farmers. The current Leader of the Opposition did a trade deal with Australia and New Zealand that sold farmers down the river. Is that her version of backing British farmers?

I am pretty sure that the hon. Gentleman has his facts wrong about the then Trade Secretary. The Conservative party is in favour of trade deals, but we want trade deals that best support our farming industry. [Interruption.] Before Labour Members start shouting at me, he will know that the fears and concerns about those trade deals have not come to fruition. What is more, we as Conservatives are proud of the fact that we would not enter trade deals that require the flooding to these shores of chlorinated chicken or hormone-treated beef. I also gently remind the hon. Gentleman that, as a Back Bencher, talking about foreign territories given the context of the debate about the Chagos islands is a bit brave.

My right hon. Friend is right to highlight the devastating effect of this policy and to highlight the incredible rounding-up exercise on the Treasury account books of the contribution that it will make to NHS expenditure. With the Labour party having a serious foothold in rural constituencies for the first time since 1945, does she not find this rather inept politics, which is perhaps not surprising from such a London-centric Front Bench? The policy shows a wilful ignorance of rural life and a deliberate attempt not to understand the pressures and is, in essence, selling those rural Labour MPs down the river.

I thank my hon. Friend for that point. There is some interesting polling coming out today, which I will deal with. Of course, Mr Speaker, I very much accept your point about trade, but we are genuinely concerned about the national security implications of the Chagos islands deal.

Very much so, Mr Speaker. I will give way to the hon. Member for Hexham (Joe Morris). Is he going to speak up for his farmers?

I commend the right hon. Lady’s commitment to honesty. She talks about giving Labour Members advance sight of the Opposition day motion, but when did the Labour Whips Office receive the title of the Opposition day debate? May I invite her to correct the record perhaps?

I am so sorry—in fairness, the hon. Gentleman was obviously speaking to farmers in his constituency on Sunday. Did I hear that there is a protest going on in his constituency at the moment? In any event, I actually made the announcement on national television on Sunday; perhaps he was not watching. Farmers at home will be wondering what on earth we are arguing over.

One word that the right hon. Lady has not mentioned is Brexit—the great Tory disaster of the last Parliament. How much does she estimate that Brexit cost farmers and the rural community?

The hon. Gentleman and I, unusually, can join forces on this matter. While I am going to resist the temptation to revisit Brexit, what I will do is point him to paragraph 4.11 of the CAAV report—

My apologies, Mr Speaker. I am reminded of paragraph 4.11 of the CAAV report, which sets out the peculiar legal problems posed by the family farm tax in the context of Scottish farming tenants. It is incredibly complicated, but that is a real concern, and I trust that the SNP will be exploring it alongside Conservative Members of Parliament.

In conclusion, before ambitious Back Benchers, or, indeed, the Exchequer Secretary, get to their feet and accuse these farmers, and us, of scaremongering—something they have been happy to do in the past—they should think on, discover some humility and compassion, and ask why tens of thousands of decent, hard-working and sensible people across the United Kingdom know that the Chancellor has got it so wrong. Polling by the Country Land and Business Association today shows what the public think: they do not think farmers should be whacked with the family farm tax. They think that Labour has broken its promise to end countryside decline; they think the Government should be cutting taxes on rural businesses; and 70% are not confident that the Labour Government can deliver growth to rural communities.

I say to every hon. Member on the Government Benches: do the right thing and stand up for our farmers, who are the best in the world and whose produce is renowned globally. They feed us, and now they need us. Labour MPs need to join us and axe the family farm tax.

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“thanks farmers for their immense contribution to the UK economy and the nation’s food security; welcomes the Government’s commitment of £5 billion to the farming budget over the next two years, the biggest budget for sustainable food production and nature recovery in UK history; acknowledges that the Government is having to make difficult decisions to protect farms and farmers in the context of the £22 billion fiscal blackhole left by the previous Government; recognises that the Government is seeking to target Agricultural Property Relief and Business Property Relief to make them fairer whilst also fixing the public services that everyone relies on; and notes that under the changes announced in the Budget around three quarters of claims for Agricultural Property Relief, including those that also claim Business Property Relief, are expected to not pay more Inheritance Tax.”

I welcome the chance to open the debate on behalf of the Government. The Government’s commitment to farmers is steadfast. As our amendment makes clear, farmers make an immense contribution to the UK economy and to the nation’s food security. We recognise and respect the crucial contribution that farmers make to our country’s way of life.

We must also recognise, however, the state of our public services and the mess in which we found the public finances when we came into power. There was no way we could have left things as they were. Unlike the Conservatives, there was never any question of Labour ignoring the £22 billion black hole that we uncovered in the public finances. We had to bring the previous Administration’s fiscal irresponsibility to an end. We had to ensure that our country lives within its means. We had to get public services back on their feet while meeting our tough new fiscal rules, which end borrowing for day-to-day spending. That is what we, as a responsible Government, had to do.

That is why, at the autumn Budget, the Chancellor set out a number of difficult but necessary decisions on tax, welfare and spending. These decisions were to restore economic stability, fix the public finances and rebuild our public services. One of the decisions we took was to reform agricultural and business property relief. We chose to do so in a way that maintains significant tax relief for family farms, while fixing the public finances as fairly as possible.

The hon. Gentleman will want to explain this, Mr Speaker. The Government have argued that only 27% of farms will be affected by this measure, while the National Farmers Union says it is 75%. Will he at least give us an indication from the Dispatch Box, perhaps supported by a note in the Library of the House, showing the modelling that contradicts the NFU’s figures?

I point the right hon. Gentleman to the letter the Chancellor recently sent to the Treasury Committee, which sets out some of these figures in detail. Some of the confusion that he and other hon. Members have encountered might come from the fact that there are different sets of data. The set of data he may be referring to relates to the total value of farms across the country, but if we are thinking about inheritance tax claims, it is right to look at His Majesty’s Revenue and Customs claims data on inheritance tax. Looking simply at the value of a farm does not tell us what the inheritance tax liability for that farm may be, given that we would have to look at the ownership structure—at who owns what—and at any liabilities, and so on. That might be where some of the right hon. Gentleman’s confusion is coming from.

At Treasury questions yesterday, I raised with the hon. Gentleman the case of Upper Peppershill farm in Long Crendon, a small 380-acre arable farm in my constituency, which the shadow Secretary of State and the Leader of the Opposition visited a few weeks ago. The family have calculated that if they borrow the money to pay this new tax, it will take them 40 years to pay it back. What does the Minister say to the Seed family in Long Crendon about the tax bill they face?

It is not appropriate for me, as a Minister, to give specific tax advice to one family, but I will talk about the general principles behind our reform. In fact, I was about to begin setting out some of the detail of our policy.

On the general principle, is the Minister seriously saying that all the tax advisers advising all the farmers across the country and all the land valuers, who are qualified in a way that he is not, are wrong, and that he is right?

What I am explaining is that the data for claims through HMRC, which shows the claims made under agricultural property relief and business property relief, is the correct set of data to work out future liabilities on that basis. That is what the projections that we have put out are based on. That is set out in the Chancellor’s letter to the Treasury Committee that I mentioned. I urge the right hon. Gentleman and his colleagues to review that letter to understand the data I am talking about in more detail.

I would like to make a bit of progress to explain some of the detail behind our policy, which may answer some of the questions that hon. Members are jumping to their feet to ask.

We know that inheritance tax is always an emotive issue, and understandably so. It is a natural desire for people to want to pass on their assets to the people they love when they pass away.

The standard single rate of inheritance tax has been 40% since 1988, and assets have generally long been entitled to nil-rate bands, reliefs and exemptions. A form of relief for agricultural property was introduced on estate duty in the Finance Act 1948, meaning that this duty was charged at 55% of the rate that would normally have applied. A new agricultural property relief and a business property relief were created in the mid-1970s with the introduction of the capital transfer tax. The rate of relief increased over time to a maximum of 50% relief; that maximum rate was then increased to 100% in 1992. This means that agricultural landowners and farmers did not receive 100% relief for almost all of the 20th century, and yet farms passed down between the generations.

I am grateful to the Minister for giving way. That was why the law was changed to introduce 100% relief. Family farms were not being passed down because the value of land was increasing. Will he consider that before bringing in these changes?

To address the right hon. Gentleman’s point, we recognise that agricultural and business property relief play an important role in supporting family farms, but the full unlimited exemption from inheritance tax has simply become unsustainable. The four most recent years-worth of data make clear why. The data shows that a very small number of agricultural property relief claimants, including those who claim business property relief too, benefited from a very significant amount of relief. In total, 47% of the Exchequer cost of the relief went to the top 7% of claims. To be clear what that means, I will put it another way. For every 14 or so estates, the top one among them claimed half the total relief.

Let me tell the Minister what concerns me most. There has not been an impact assessment, but if the major driver for the Government, whether we accept it or not, was to raise some money from this source, why were other more effective mechanisms not used, such as business roll-over relief, where a business could be sold in another context and rolled over into buying the land, deferring capital gains tax? If that mechanism had been used, the money would have been taken from much wealthier people who were not actually producing food in the first place. Now, we are capturing a massive proportion of small family farms completely unnecessarily, because due consideration of better alternatives was not done by the Minister.

I reassure the right hon. Gentleman, for whom I have a lot of respect personally, that we carefully considered how to calibrate the policy to ensure that significant relief from inheritance tax is still available to family farms, while at the same time fixing the public finances in as fair a way as possible.

I am very grateful to the Minister for giving way. He has just referred to his analysis of four years of data which led him and the Government to this position. That is an incredible thing to ask the House to believe, because just a few months ago his right hon. Friends the now Prime Minister and Secretary of State were specifically ruling out these policies to audiences of farmers and landowners. If the data of four years’ standing told him that this was the right policy, why were those now Ministers economical with the actualité when they spoke to the farmers themselves?

The data we did not have before the general election was the £22 billion black hole that the hon. Gentleman’s party left in the public finances. He knows that, because it is acknowledged by the Office for Budget Responsibility that the full information was not shared with it. It has said that its forecast would have been “materially different” had it known that that was the case. We have had to take a number of difficult decisions.

This talk of data reminds me that over 12,000 farmers and agribusinesses have gone out of business since 2010. Will the Minister reassure me about what we are doing to improve profitability in British farming?

My hon. Friend is absolutely right to highlight the decimation of businesses during the Conservatives’ time in office. Businesses across the economy need stability, public finances on a firm footing and investment in our public services. That is what businesses across the country need to invest for the future and grow.

I am very grateful to the hon. Gentleman for giving way. He is a Treasury Minister. May I suggest that some of the disparity between the Treasury figures and those of other reputable bodies representing agricultural interests is because of land values? Average values for ordinary land in the Cotswolds are now £15,000 an acre. Will he accede to the request of my right hon. Friend the Member for Salisbury (John Glen), a former Chief Secretary to the Treasury, and publish an up-to-date impact assessment on how many farms this tax will affect?

A lot of data has already been published. I mentioned the Chancellor’s letter to the Treasury Committee, and further details on the impact will be published alongside the draft legislation in the normal way. I suggest that the hon. Gentleman reads the letter to the Select Committee. As he and the his right hon. Friend will know, the impacts are typically published at the time of draft legislation. That is the normal process. Indeed, it was the norm under the previous Government.

Some of the correspondence I have received on this issue talks about the fact that the measures inflate land value. Does my hon. Friend agree with that assessment, and what will the changes do to help farmers across the country in that respect?

My hon. Friend is absolutely right to highlight the fact that some of the features of the current inheritance tax relief system mean that it is an attractive vehicle for tax planning to reduce inheritance tax liability. People who have wealth who have never been farmers and do not intend to become farmers have been using it as a way to avoid inheritance tax. In fact, reducing that should take some of the pressure out of agricultural land values and, I would hope, help to make a more sustainable farming sector in the future.

It is important to get the facts right and to get the right number of farms in frame. The Minister must know that the CAAV has said that the Government estimate is down by a factor of five. According to its impartial independent review, 75,000 farms will be in frame for this tax, not the figure the Minister is relying on.

My response to the right hon. Gentleman is the same as that to the right hon. Member for South Holland and The Deepings (Sir John Hayes). I believe he is looking at the data for the total value of farms, rather than for inheritance tax claims. The two are different things. For instance, a farm worth £5 million owned in equal shares by five individuals would have no inheritance tax liability because of the way claims work. That is where I think some of the confusion has come from. There is different data around the value of farms and around the value of inheritance tax claims. For the purpose of today’s debate, it is the inheritance tax claims that are the right data to focus on.

On the point about facts, I was fascinated by the end of the shadow Secretary of State’s contribution. She opined on whether Labour was sticking to its promise to end the decline in the countryside. I wonder who was in government for the last 14 years while the countryside was declining. The Conservative Government sold out British farmers through trade deals and 12,000 farming businesses went out of business. Does my hon. Friend agree?

I very much agree with my hon. Friend. He points out a repeated pattern of the Opposition: their total refusal to take any responsibility for the damage they caused over the past 14 years. They may wish it never happened; the British people disagree.

I am going to make some progress.

I just set out some statistics that show how this tax relief is very concentrated in a small number of claims. In the context of the dire fiscal situation we inherited and the critical need to fix the public finances and get public services back on their feet, it cannot be right to maintain such a significant level of relief for a very small number of claimants. That is why, from 6 April 2026, the full 100% relief from inheritance tax will be restricted to the first £1 million of combined agricultural and business property. Above that amount, there will be an unlimited 50% relief, so inheritance tax will be paid at a reduced effective rate of up to 20%, rather than the standard 40%.

The new system, it should be noted, remains more generous than in the past. As I mentioned, the rate of relief prior to 1992 was a maximum of 50% on all agricultural and business assets, including the first £1 million. The reliefs we are providing will be on top of all the other exemptions and nil-rate bands that people can access for inheritance tax. Taken in combination, this means that a couple with farmland will typically be able to pass on up to £3 million-worth of assets to their descendants without paying any inheritance tax.

I thank the Minister for giving way. The CAAV calls the £3 million figure “unrealistic” and “unreasonable”. Does he not agree?

The £3 million figure is what a typical couple could expect to pass on to their direct descendants using the various nil-rate bands and inheritance tax reliefs. I would advise any specific family to get advice from an accountant or financial adviser. In terms of the scale of reliefs, when we combine the inheritance tax relief to agricultural and business property relief, along with the nil-rate bands, nil-rate residence bands and the transferability between spouses, that is how we come to the figure of £3 million.

Given that he appears to be leading for the Government on this issue, rather than the Secretary of State for Environment, Food and Rural Affairs, can the Minister tell me how many farmers he has met personally over the last three months? He seems very confident about how this will affect them. The exact number, please, of the farmers you have met personally over that period.

I have met members of the National Farmers Union, representing the farming industry, a number of times since the Budget for detailed discussions. That has helped us to understand the impact that this policy will have and to ask for their support in communicating how it will work.

I am going to make some progress. I am going to continue to explain how some of the other exemptions within the inheritance tax system will benefit people affected by this policy.

Can the Minister confirm that in the case of farms worth several million pounds, any mortgageable value is not included for the purpose of inheritance tax? Might that explain the discrepancies in some of the figures that are being bandied around, in which I believe mortgages have not been taken into account?

That is an important point. Looking at the pure asset value of farms does not tell us what their inheritance tax liability might be. As my hon. Friend rightly points out, any liabilities must be netted off against the value of any estate, and the ownership structure—the various nil rate bands, previous spousal transfers, giftings and so on—need to be considered.

No. I am going to make some progress.

As my hon. Friend the Member for North East Derbyshire (Louise Jones) has pointed out, a range of exemptions need to be taken into account. Full exemptions for transfers between spouses and civil partners will continue to apply. Any transfers to individuals more than seven years before death, as gifts, will continue to fall fully outside the scope of inheritance tax, and taper relief will apply in certain circumstances within that time. Furthermore, any tax that is due in relation to these assets can be paid in instalments over 10 years, interest free. Those payment terms are more generous than in any other part of the tax system.

As I have mentioned several times during the debate, these decisions have been based on understandings that draw on data from both DEFRA and HMRC. I note that there has been some confusion on the Opposition Benches, whether wilful or not, about what the data shows.

The hon. Gentleman has made an important point, but analysis will show that over a 10-year period, 99% of the profit from the average 350-acre arable farm owned by a couple will go back towards paying inheritance tax. That does not leave enough money for them either to invest or to live. I wonder how the hon. Gentleman thinks they can deal with that.

I have confidence in the way in which we have calibrated the policy. As I said to the right hon. Member for Salisbury (John Glen), it has balanced the need to retain significant, generous provision of inheritance tax relief for family farms with ensuring that, at the same time, we fix the public finances in the fairest way possible.

The hon. Gentleman is being very generous with his time. In view of the point that has just been made by my right hon. Friend the Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson), will he not consider, at the very least, looking at some dispensation for farmers above a certain age, given the lack of time that they will have to plan for this intervention? The truth is that someone who is near retirement age will be faced with the prospect of 10 years of all their projected profits being eaten up by this tax, which will mean that the farm cannot go to the next generation. The hon. Gentleman must surely look at some mitigations to deal with that reality for so many farmers who are concentrated in that older age group.

We know that individual circumstances will vary. Any individual who is concerned about their specific tax liability should obviously consult an accountant or financial adviser. We would not know, from a thumbnail sketch, whether that person had any inherited nil rate bands, what their liabilities were, what decisions they had made about gifting, and so on. A huge number of factors will play into this, and it is right for individuals to seek specific advice. Things that are said in this Chamber may be creating undue anxiety, when people should be looking into the detail.

The Minister seems to be trying to suggest that not much farmland will have to be sold off as a result of this policy. However, on 4 November, following an urgent question, when I asked his colleague the Minister for Food Security and Rural Affairs, the hon. Member for Cambridge (Daniel Zeichner), how food security would be preserved if farms had to be broken up and sold off possibly for development, he replied:

“Of course there are trade-offs. There are a range of pressures on our land, in respect of housing, food, energy and so many other things.

That seems to constitute an acceptance that we will lose farming land, and people will be building on it instead.

That is not how I interpret the comment, but I make no apology for the fact that we want to support farmers, as well as making our energy transition and building homes for people across the country. We need to ensure that we are achieving all the goals that the people of this country elected us to achieve.

I want to say more about data, because several Members have raised the subject. As I have explained a few times now, the DEFRA data shows the asset value of farms in England, but it is not possible to accurately infer a future inheritance tax liability from data on farm asset values. Any inheritance tax liabilities that farming assets may face will be affected by who the owners are, the nature of the ownership, how many owners there are, any borrowing that they have, and how they plan their affairs.

The Minister talks about data. Given the massive discrepancy involved, and the impact of this policy, if the data shows in 12 months and 24 months that the Government have got this catastrophically wrong, will they revisit the policy and do a U-turn?

When we approach policies in government we test them thoroughly and consider the details and the data, and we ensure that any conclusions we draw are based on the correct set of data, which is part of the conversation that we are having today. I do not know whether it is due to mischief or misunderstanding, but there is a certain focus on the total value of farms rather than on inheritance tax liabilities. The data on inheritance tax liabilities is the correct data to look at when evaluating the impact that the policy may have.

I am going to make some progress.

As I said earlier, a farm worth £5 million but owned by five relatives in equal shares could have no inheritance tax liability.

The CLA has pointed out that 46% of farms are owned by individuals. The data produced in the letter does not take that into account; it concentrates on couples who will receive the relief.

I note that the hon. Gentleman’s grasp of economics is about as good as Liz Truss’s was. As I have said, the importance of the claims data is that it tells us what the inheritance tax liability will be. I understand that Members are referring to many other sources and sets of data, but when we are looking at the impact of a change in inheritance tax relief, it is claims data that tells us what that is likely to be.

I am going to make some progress. I have given way many times already.

Looking at the HMRC data, which relates to estates making claims for agricultural and business property relief, is the correct way to understand inheritance tax liabilities. That data shows that our reforms are expected to result in up to 520 estates claiming agricultural property relief, including those that also claim business property relief, paying some more inheritance tax in 2026-27. Let me put that in context. It means that nearly three quarters of estates claiming agricultural property relief, including those that also claim business property relief, will not pay any more tax as a result of these measures.

As this change is introduced, we expect people to respond in a number of ways to reduce their inheritance tax liabilities, and the costings by the Office for Budget Responsibility assume that that will be the case. People may change ownership structures, plan for their succession differently, and make greater use of gifting provisions and insurance.

I thank the Minister for giving way; he is being generous. He has mentioned claims for agricultural property relief and business property relief, but what about claims for business property relief alone? Have they been included in his figures?

I thank the hon. Lady for her intervention. As we know, any farmer who is renting out land or farming it themselves will typically have an estate that includes an element that is eligible for agricultural property relief. The figures I set out include those who claim for business property relief as well, and those figures are set out in the Chancellor’s letter to the Treasury Committee.

Despite attempts by the Opposition to hijack this debate, I can honestly say—[Interruption.] If they want to champion our agricultural communities, they might have started around 14 years ago. The conversations that I have had with farmers in my constituency have been balanced and productive in their scope, with an understanding of why the provisions have been brought in. Given that two thirds of the land bought in England in 2023 was bought by non-farmers, does the Minister agree that it is right that this Government are taking the opportunity to close what is essentially a tax loophole for non-farmers?

I thank my hon. Friend very much for her intervention. It is telling that when she makes such an important and sensible point, the Opposition do not want to hear it and try to shout her down. As she rightly points out, our changes to the reliefs will make buying land less attractive as a means of inheritance tax planning. This means that land prices are likely to become more affordable for farmers, thanks to a reduction in tax-motivated investment in agricultural land.

I have given way already, so I am going to make some progress.

The reforms should be seen in the context of the significant existing support for the farming industry in the wider tax system, including the exemption from business rates for agricultural land and buildings, the ongoing entitlement for vehicles and machinery used in agriculture to use rebated diesel and biofuels, and the exemption from the plastic packaging tax for the plastic film used to produce silage bales. On top of that, farmers are able to add together their profits from farming over two to five years and be taxable on the average of those profits, building flexibility into their tax arrangements for difficult years and unexpected challenges.

Does the Minister agree that in the Government’s haste to target tax avoiders such as Jeremy Clarkson and others, as has been mentioned, they have actually caught a lot of small and medium-sized farmers in their sights, in a completely irresponsible way?

Although our policy should discourage the kind of tax planning to which I think the hon. Gentleman refers, the policy is broader than that. It is necessary to balance significant relief from inheritance tax on family farms with the need to fix the public finances, and that is the balanced decision that we have taken with this policy.

Of course, the decision on this tax policy sits alongside the Government’s wider decisions at Budget 2024. There is £5 billion over two years for farming and land management in England, which will help restore stability and confidence in the sector. That includes the largest ever budget directed at sustainable food production and nature recovery in our country’s history. Despite the difficult fiscal inheritance, £60 million of funding has also been prioritised for the farm recovery fund, to support farmers impacted by severe wet weather over the last year.

The Minister rightly mentions the need for more sustainable land management, but is it not the case that the changes to APR will actually undermine the sustainable land management initiatives that farmers in Mid Sussex are trying to deliver every day?

No, that is not the case. The Minister for Food Security and Rural Affairs, my hon. Friend the Member for Cambridge (Daniel Zeichner), who will be responding at the end of this debate, can set out more about what the Government are doing to support farmers in their work on land management across the country.

I backed British farming ahead of the general election, and I back the farmers in my constituency. I am proud to sit on these Benches with a Labour Government who are backing British farmers with an investment of £5 billion in the recent Budget. Does my hon. Friend agree that it is absolutely essential that we make sure that the money gets into the pockets of our farmers? My farmers complain about the delays that they experienced when the Conservative party was in power.

My hon. Friend is absolutely right to draw attention to the mismanagement under the previous Government and to how important it is that, through the commitments we made in the Budget on the farming budget over the next two years, we support farmers across the country as evidence of our steadfast support.

I recognise that the reforms we are making to agricultural and business property relief will have an impact on some individuals. I recognise that some of the larger estates, particularly those worth over £3 million, may be affected by the changes, but the reforms to the reliefs will maintain significant levels of relief from inheritance tax, at a total Exchequer cost of over £1 billion in the year that the reforms take effect, before rising further. They offer support for family farms and businesses across the country. We could not justify leaving the situation unchanged, with a full, unlimited tax relief benefiting a very small number of estates by a very significant amount.

Does my hon. Friend agree that perhaps unsurprisingly, given the name of their political party, Conservative Members seek to preserve the status quo, which includes the top 7% of claimants—the wealthiest—accounting for 40% of the overall APR budget? Does he agree that the Conservatives need to set out how they would make the situation fairer and provide a better deal for our agricultural sector?

My hon. Friend is absolutely right to point out that the Conservative party has no ideas about how the country needs to change, no ideas about how to get the public finances back in order, and no ideas about how to get public services back on their feet or how to deliver economic stability.

Farmers in my constituency tell me how much they are struggling to see a GP and to get public transport—the buses just are not there. The rural economy has been ruined by 14 years of Conservative Government. Can the Minister reassure us that the necessary actions that we are taking in the Budget will get our public services working again for our farming and rural communities?

I will not try your patience, Madam Deputy Speaker, but I feel that my hon. Friend’s intervention relates to the debate in hand, as we have had to take a tough decision on taxation policy in order to fund our public services. Those public services are, of course, enjoyed by people across the country, including farmers and those in rural communities.

I will make some progress.

As I was saying, we could not justify leaving the situation unchanged, with a full, unlimited tax relief benefiting a very small number of estates by a very significant amount, given that there is such an urgent need to repair the public finances and to improve the hospitals, schools and roads on which people across the country depend, including those in rural communities.

There is a lot of talk from the Opposition, who are getting very excited by this debate, about farms, but we have to remember that farms rely on farm workers. In the name of accuracy, could my hon. Friend put on the record a reminder of which Opposition parties, including the Lib Dems, voted for the abolition of the Agricultural Wages Board under the last Government? That actually drove down rural wages, and we should be talking about farm workers. Is it not true to say that when the Opposition refer to exemptions, the only thing they want to talk about is exemption from their own record being under scrutiny?

My hon. Friend makes a powerful point about the record of the Opposition parties. In our Budget, we made sure to protect the payslips of working people by not increasing income tax, employee national insurance or VAT.

Our approach to reform strikes the right balance between providing significant tax relief for family farms and fixing the public finances in a fair way. As such, I commend the Government’s amendment to the motion before us today.

It is my utter privilege to speak on behalf of my party and 1,500 farmers in Westmorland and Lonsdale. I represent people all the way from the Yorkshire dales and the North Pennines to the Lake District and the Cartmel peninsula.

We are proud of our farmers not just because they feed us and care for our environment, but because they are the stewards of our heritage. When UNESCO awarded the Lake District world heritage site status, it gave as much credit to the farmers as it did to the glaciers that formed the landscape in which we live, which drives a tourism economy with more than 20 million visitors a year. We seriously value our farmers, and they need to hear that, because the tone of the debate—not just today, but over the last few months—has suggested that politicians do not value farmers. However, words are cheap.

I have no doubt about the hon. Gentleman’s personal commitment, but do not the Liberal Democrats have a credibility problem? For all the rhetoric in this Chamber and outside, when they actually get their hands on power in local government, such as in Oxfordshire, they brutally attack their farmers by banning all meat and dairy?

That is nonsense. Wherever Liberal Democrats are in control, we back and support our farmers and are proud to do so.

Talk is cheap, and most people in this House will at some time quite rightly have uttered the sentiment that British farmers are the best in the world, without actually understanding why. It is true that they really are the best in the world, and that is because the way in which our farming economy is structured is based on the family farm. Family farming makes a difference because it has close husbandry, higher environmental standards, higher welfare standards and better quality produce. It is not an accident that British farming is the best in the world.

Does the hon. Gentleman think that the difficulty with the Labour party is that it just does not understand farmers, because they do not fit neatly into its clumsy definition of what a working person is? These are people who work 12 hours a day, outside in the toughest environment, and who work into their old age, but they do not get into the Labour club.

There is something in that, and I will come to that in a moment when I talk about poverty in our countryside, when it just does not look the way people in urban communities think it ought to look.

There is no doubt that family farms are under attack, but this did not start on 4 July, and I want to go through why we have ended up where we are now. The botched transition from the old farm payment scheme to the new one is the principal source of hardship among our farmers. Let us start with the fact that the environmental land management scheme—ELMS—budget saw a £350 million underspend under the last Government, and that was not an accident. It was blindingly obvious that that was going to happen. One hill farmer I spoke to just last month told me that, as a consequence of the transition, he will lose £40,000 a year in basic payment. To replace it, he will gain £14,000 under the sustainable farming incentive. By the way, it cost him £6,000 to go through a land agent in order to get in in the first place.

The hon. Gentleman is making a profoundly important point. Not for the first time he is speaking as a Liberal Democrat, but also in a way that belies the fact that he is a Liberal Democrat, because he is genuinely committed to the countryside. He has made a point about family farms; the important thing about them is not only the arguments that he has already advanced, but the sense that they represent a continuum—an investment for the future. The reason this policy is so detrimental is because it impacts on that sense that farmers are investing now for generations to come.

I am going to get to that, but the right hon. Gentleman will have to tolerate me accurately pinning blame on his side before I do so.

We were told by the last Government that they would maintain the amount of funding that we used to spend when we were in the European Union. In England, that was £2.4 billion. In one sense, and one sense only, they kind of kept that promise because it was £2.4 billion throughout that five years. However, they did not spend it, because they phased out the old scheme very rapidly, causing a great hardship, particularly to small family farms, and they brought in the new schemes far too slowly and made it very difficult for people to get into them. By the way, the people who were able to get into the new schemes were the big farmers. They were the landowners who had land agents to help them get into the schemes. So the large landowners with the bigger estates managed to get into those schemes. They are all right, broadly speaking. It is the smaller family farms—the farmers who own their own farms and the tenants—who have struggled.

It is also worth bearing in mind that there has been a little bit of inflation since 2019. The cost of running a farm has gone through the roof when it comes to feed, energy, fuel and all sorts of input costs. So the fact that we are at just £2.4 billion now, as we were five and a bit years ago, is absolute nonsense. It is important also to recognise that the grants that were available under the last Government, and now, are in reality often only available to those who have the cash flow to be able to get them in the first place.

If land prices were to go down, as has been described by the Minister—I am not sure I believe that—and a farmer had borrowed heavily from the bank, the bank might look at the value of their asset and could possibly call in the loan, which would put the farmer out of business right away.

I have heard that from land agents in my own constituency, and my hon. Friend makes a really interesting point. We obviously do not know what will happen unless and until it happens, but that could be exactly what happens, in which case there would be no money to invest in businesses and people would end up not being able to pay back their loans. Also, the Government would not make anything like the amount of money that they think they are going to, so whatever the outcome, it is bad news for farmers and also for the Exchequer.

It is also worth bearing in mind where the money that the last Government spent has gone. It has gone on landscape recovery and other schemes mostly taken up by very, very large estates, where either smaller farmers got nothing or tenant farmers had to do exactly are they were told. In my part of the world, we have seen something akin to lakeland clearances over the last three or four years as a result of all this. So let us not forget that before 4 July, the farming economy was under enormous threat and in enormous danger, either by accident or design, due to the failures of the previous Government, and the Conservatives need to take that on the chin.

The hon. Gentleman mentioned tenant farmers, and I know that he will have some in his constituency, as I do in mine in Shipley. Nationwide, a third of all farmland is managed by tenant farmers. Last month, the Department announced the appointment of a new commissioner for the tenant farming sector in England, which I hope that the hon. Gentleman will welcome. Does he agree that the last Government were operating much more in the interests of large landowners than of tenant farmers?

The hon. Lady makes a good reference to the outcome of the Rock review, which took place under the last Government, although they took too long to put those things into practice. I am pleased that this Government have said that they will implement the recommendations of the Rock review. Baroness Rock deserves enormous thanks and praise from all of us for her work defending tenant farmers, and the fact that she has not been replaced is very regrettable. We are talking today about farming and the consequences of the inheritance tax issue. It would have made so much more sense, given the impact on tenants, if the commissioner and their framework had been put in place before this policy was brought into practice. This feels like putting it the wrong way around.

I am going to crack on now and not take any more interventions because, with help from Members on either side, I have already taken up nine minutes of this place’s time.

I want to give the House a final run-through of some of the consequences of the terrible failure of the Conservative Government on farming. In the last five years alone, livestock farm incomes have dropped by 41%. Year on year, there has been a drop in sheep numbers of over 4%, and a 6% annual drop in the number of dairy farms. We lost 440 dairy farms last year alone. So that is where we are, and that is before we get into trade deals or the attack on rural services, healthcare and dentistry. I am also going to quickly make a reference to Brexit because, without a doubt, our leaving the European Union and the terrible deal that the Conservative Government signed us up to have had the biggest impact of all on agriculture.

Madam Deputy Speaker, you would think that the new Labour Government had a massive open goal in front of them, given what they inherited from the Conservatives. They had a massive open goal, with no goalkeeper between the posts, but somehow the ball ended up in row Z. I find it almost impossible to countenance how they have managed to fluff that opportunity.

I want to talk about two people in my constituency who gave me a really useful insight into the family farm tax in the last couple of days. Both of them gave me four separate case studies. The first was a land adviser who talked to me about four farms. Their story was about shrinking businesses as a result of the family farm tax, and about the potential reduction in the value of land, which would mean that they would not be able to invest in their businesses and there would not be the tax yield that the Government were banking on. Another, a local accountant, gave me four anonymised case studies of local family farms in my communities. Of those family farms, only one was earning above the minimum wage, and three were earning significantly below the minimum wage. In those four cases, two would have to sell parts of their farm and two would have to sell their entire farm to pay the inheritance tax.

The next question is: who would those farms be sold to? The hon. Member for Shipley (Anna Dixon) spoke a moment or two ago about the proportion of farmland being sold into private hands, into private equity and so on. Farms will go into those hands even more—as if a neighbouring farmer is going to buy that land when they are in the same predicament.

We are seeing hard-working farmers, on less than the minimum wage, having to sell off their land to private equity. Is that a very Labour thing to do? The hon. Member for Perth and Kinross-shire (Pete Wishart) spoke about Labour not getting the working class in the countryside, and this is a perfect example. It is not too late for Labour to learn.

It seems clear that, as with the winter fuel allowance changes, the Government have missed their target here. As my hon. Friend rightly says, it seems obvious that large landowners will have the ways and means to avoid this tax. Does he agree that there should be some form of working farm test?

Yes, and the Government should have been thinking about these things. We heard from the Minister that lots of planning and diligence went into this before it came out of the Chancellor’s mouth on Budget day, but it does not feel like it, because there is a whole range of issues that could have been considered in advance.

There is something that will do more immediate harm to farming than even the inheritance tax changes, and that is the Government’s decision to summarily reduce basic payments by 76% in a single year. This will have a direct impact, in particular, on tenant farmers who rely on that money and will end up missing their rent payments. We will see evictions as a consequence.

The Government have trumpeted the £5 billion over two years, which my basic maths tells me is £2.5 billion a year. I am always careful, or nervous, about making confident predictions, particularly in this place, but my confident prediction is that they will not spend that budget. If the basic payments are cut by 76% without the new schemes being up and running to replace them, the Government will not spend that money. By underspending, this Government will end up in the same mess as the last one.

I have huge respect for the hon. Gentleman, my constituency neighbour, but I have a question. I think the hon. Member for North Cornwall (Ben Maguire) suggested a working farm tax, and it was not clear to me whether the hon. Gentleman accepted or rejected that suggestion. We have heard Liberal Democrats talk in recent weeks about land taxes and wealth taxes as alternatives to raise the revenue to fund their many, many spending commitments. Could the hon. Gentleman clarify that point?

To clarify my response to my hon. Friend the Member for North Cornwall (Ben Maguire), the Government could have looked at a working farm exemption so that these people will never have to pay this inheritance tax. Who knows, the Government might consider putting people who are not active farmers under the HMRC microscope instead. That would be far preferable to what we have.

Grant payments are a significant issue. With the cut to basic payments and the Government’s failure to be as quick as they should have been on the new payments, I am pretty confident that we will see an underspend from this Government, just as we did from the last one.

In recent days we have seen the Government’s decision to pause capital grant payments, which will be a huge blow to our farmers. The areas that will end up being cut or paused include: hedging, walling and fencing; countryside stewardship grants to allow nature-friendly farming; work to prevent pollution of waterways; slurry storage; covered yards to clean up our rivers; peatland restoration; carbon storage; and being the cornerstone of natural flood management.

My constituent Matthew, who farms in Eden valley, explained yesterday that he has just finished installing 10,000 metres of fencing for a nature-friendly farming project. The pause in the grant funding means that he will not be able to buy any hedge plants to finish the work, and nor will he get the mid-tier countryside stewardship annual payment. He says:

“Some say it could be paused until June…this is a business-breaking issue.”

On top of that, the higher-level payment has not increased since I entered this House in 2005. It was £40 per hectare for moorland restoration in 2005, and it is £40 per hectare today. That is a brutal attack on hill farmers and those who farm our common land. Again, some of the sustainable farming incentive options on common land are good, and they should be applauded because doing more for nature is a good thing, but the SFI moorland options are currently closed to all common land because of technical issues online. We can see those consequences very clearly.

Among all this, farmers are struggling, often with their mental health. The isolation that people feel when their family have farmed a valley for generations and they might be the one who ends up losing the family farm is utterly devastating. However, farmers just crack on with the job, so our job is to be their voice.

Farming is a glorious vocation. Farmers work to protect our towns and villages from flooding, to promote biodiversity, to back the tourism economy, to tackle climate change, to underpin landscape heritage and to produce our food. The fundamental failure of both the last Government and this one is that they have brought together agricultural policies that actively disincentivise the production of food. That is criminal, and it is foolish. The first thing the Liberal Democrats would put right is a food strategy and an additional £1 billion a year for ELMs to back our family farmers.

It is time we listened to farmers such as Liz and Matthew Staley from near Kirkby Stephen, and their sons Luke and Lewis. I regularly talk to Liz, and she says:

“There is so much anguish out there for farmers.”

On the new schemes, she says:

“They aren’t working and there isn’t that crossover just yet… They’re just making it harder to make a living.”

I want to encourage people on all sides, especially in government, to listen to Liz. It is the vocation of farmers to save our planet and to feed our country. The least we can do is give them the value and the future they deserve.

This debate is already oversubscribed. To point out a simple fact, if you were not here for the shadow Minister’s opening speech, you will not be called. That is basic etiquette.

I represent Ribble Valley in Lancashire, one of the most beautiful constituencies in the country and one of the most rural. There are 820 farms on my patch, including 121 dairy farms. I single out dairy farmers as probably the most passionate and dedicated farmers I have encountered.

The problem with this motion is that it ignores the wider context of what is happening in our rural economies, and I will briefly talk about how remarkable those rural communities are. Not only are our farmers vital to our food security, but they often do the intangible work that we do not see on a local authority balance sheet, including gritting and clearing smaller roads that councils cannot get to in winter, and maintaining all those beautiful countryside walking routes that we all enjoy for much-needed rest. There are endless examples of how farmers are the best examples of the community spirit that we are rightly so proud of in this country.

I will share a quick story about a farm company in my constituency called Butlers farmhouse cheeses. Butlers produces the famous Blacksticks blue cheese and, I believe, is the second largest producer of cheese in the UK. Last year it suffered a devastating fire that completely destroyed its packing and logistics hub. Remarkably, the company rebuilt a whole building in a few weeks by using all of its supplier networks, and that was based on the faith and goodwill that farming communities engender. Butlers was able to retain the 95 staff it had, as well as supporting jobs in 20 to 30 local suppliers. These are the kinds of farms we are supporting, and we must ensure that our strategies work for them in the long term. Butlers is a fourth-generation farm that would not be back on its feet today without the relationships and trust that are so embedded in our rural communities.

I am excited for what Westminster can do, and is doing, for farmers. We can provide clarity on the mission. One of the best things about this new Labour Government is our focus on overall missions for this country, to be able to be clear to farmers and farming communities about exactly what this Labour Government plan to achieve over this decade of national renewal, with a clear ask for farmers on how they can contribute to that mission and how they can benefit. I heard about the need for such clarity time and again while campaigning. For years, farmers lacked clarity under the Conservative party, and they desperately need it.

I fully recognise how much the hon. Lady wants to serve her new constituents, and I hope she is right. Does she recognise how difficult it will be for farmers in her constituency, as it will be in mine, to pay the inheritance tax? Land values are very high and the abstract capital value can be in the tens of thousands, but the income that an acre of land generates can be in the hundreds, so there is an enormous disjunct between the value of the land in the abstract, as far as His Majesty’s Revenue and Customs is organised, and the actual money that the farm will generate. How does she think that farmers in her constituency are going to pay the inheritance tax?

I will come on to opportunities to increase the prosperity of farmers, which should be our mission.

The second opportunity for farmers is around procurement and trade, and using the Government’s own purchasing power to back British produce, so that 50% of food brought into hospitals, Army bases and prisons is locally produced. We can protect farmers from being undercut by low welfare and low standards in trade deals, and we are seeking a new veterinary agreement with the EU to get our exports moving.

I want to touch on devolution and its ability to empower local understanding. Anyone who lives in a rural community knows that part of its strength is a deep generational knowledge of the land and local area. Nowhere is that more evident than in generational farming. Indeed, it is that knowledge, passed down through generations and trained into children from the time they can walk, that ensures some of the efficiencies that keep our farms going. I am a huge advocate for devolution, especially for areas such as Lancashire, where Ribble Valley is located, that include vast rural areas, because it brings democracy and understanding closer to communities. That is a huge issue that the Government are progressing at pace in order to do right by rural communities.

I am grateful to all the farmers who have been having open conversations with me about how past and future policy has and could affect them. Any new Government will take some time to unpick how relationships have worked in the past, and how they might want to change them. I came to Westminster as someone who is passionate about local leadership and devolution, and there is much that this Government can do to help farmers by taking decisions.

The hon. Lady is making an eloquent speech about farming and the importance of farmers to our communities; they undertake roles such as gritting the roads and cutting our hedges, as well as feeding the nation we live in. She talks about devolution. Does she agree that the Department of Agriculture, Environment and Rural Affairs of Northern Ireland has said that one third of farmers will be impacted by the agricultural property tax, with 75% of our dairy farmers being the hardest hit? The policy is not working. Stop the family farm tax grab.

If the hon. Lady will allow me, I will come to how we can help the farmers who will be affected by the measures.

To finish my point about devolution, as an MP in an area with huge extents of rural economy, it is critical to me that devolution reflects our rural areas as much as our metropolitan ones. I look forward to seeing how the upcoming devolution White Paper addresses that challenge. Town and parish councils really understand our rural communities and can play a bigger role in local democracy.

The hon. Lady is making an interesting speech, and I am grateful for it. She is right that we should import less food and use Government procurement to help with that, and she is right about the inter-generational quality of family farms. Will she acknowledge that, in delivering the kind of food security that her speech implies, we cannot have the most productive farmland eaten up by large-scale solar developments and housing? We need to protect our grade 1, 2 and 3 land for the very reason she gave, because that allows us to deliver the food security that she and I both want.

As the Minister pointed out, many farms will not be affected by the measure and it will not have the impact that Opposition Members are leading people to believe.

We have an opportunity to support our farmers, as I touched on in my response to the hon. Member for Upper Bann (Carla Lockhart). I have sat down with farmers in my community and worked through the issues. They have taken their own tax advice. For example, there is a farm in my constituency that is worth around £3.6 million, so it will be liable for around £12,000 a year in inheritance tax over 10 years. However, if we are able to increase that farmer’s profits by £20,000 a year, by reducing energy prices, increasing British-supplied procurement so that 50% of public sector food comes from those farms, and providing a better health service that ensures all members of the family can be strong and well to work, that is the opportunity. Yes, we need to make our tax structures work better—that is fixing the foundations—but the real aim and prize is increasing the opportunity for farmers, so that they have the stability, investment and real sense of purpose and mission that allows them not just to survive, but to thrive.

I am sorry, but I will not. I spoke earlier about the strength and efficiencies in family farming. From everything that I have seen and heard from farmers so far, it is clear that while valuing embedded ways of working and learning is important, there is also much appetite for innovation and doing things better.

I will not, as I want to make progress. Just look at how farmers have led the way in restoring biodiversity and are diversifying into all sorts of new business ventures. The industry is not scared of change or opportunity, but much of it relies on and is driven by what Government determine is important through subsidies and trade agreements. After 14 years of uncertainty about what Government want from farmers, we must and will do better.

Our farms are the lifeblood of this country, along with nurses, teachers, and, yes, train drivers. I know that farmers in my constituency of Ribble Valley are ready to do their bit to tackle the dire situation in which we find this country. I do not know a group more ready to pull up their sleeves and muck in than that lot. We, as a Government, are meeting that energy and have a similar level of ambition, vision and commitment. We are looking at how these pillars of our community can work with us to achieve what we all strive for: greater prosperity for every person in this country.

I am sorry, but I will not.

The motion tabled by the Conservatives today is not clear or specific on what they would do differently to fix the economy. That, along with the continual lack of clarity and consistency on rural and farming policy when they were in power, suggests that they never had a vision of how they would support these communities well. It is easy to criticise; it is far harder to come up with a long-term vision and do the hard graft to make it a reality.

I will be voting with the Government today, but not because we do not need to push for more understanding of rural communities in Westminster. Generally in the UK, we need a better understanding of the role that farms and rural communities play in our culture and potential prosperity, across all parties and among those who work for us. I am voting with the Government today because we can better push for that change with a Labour Government, as part of a wider plan to improve things for everyone—a plan that is truly ambitious for this country and makes the brave call to take the hard, unpopular decisions now, so that in 10 years something has actually got better for everyone. I would far rather have that than a Government who go for popular headlines today, but to find that in 10 years’ time we are still facing the same challenges that we always did, and that they are getting worse.

I have a lot of faith that tomorrow, and over coming months, this Labour Government will set out an exceptionally clear and visionary plan for what our rural economies mean to Britain. We will respect them and make the most of them by providing long-term stability and a clear route for farmers to contribute to our national missions, and to benefit from them. Anyone who has waited 14 years for a Labour Government to come in and start to tackle the fact that a quarter of our children are living in poverty knows that getting the result they want takes time and hard work. We have been in desperate need of grown-ups to tackle what is coming down the line. I trust this Labour Government to do that and I will work hard with them to get it right.

Finally, I pay tribute to all the incredible farmers across Ribble Valley for continuing the conversation with me, so that we can build the strongest possible vision for farming and the rural economy in the UK.

I declare my interest as a working farmer and a chartered surveyor.

When I drive through my constituency, I am always reminded that farmers are the most underrated and essential workers in the rural Cotswolds and many other rural areas. Many have worked the land for generations, and I think in particular of my constituent, Nigel—I will avoid his surname to avoid press intrusion—who is still farming at the age of 93. This Government forget that farming is not a hobby. It is farmers who wake up at the crack of dawn to ensure that the rest of the population have food on their table, who clear the roads when trees fall on them or they are blocked by snow, and who plant trees and wild flowers to ensure that our biodiversity is protected for future generations. The hard-working farming community was dealt a massive blow by this Labour Government’s Budget in October. As my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins) on the Front Bench says, this is about not only the IHT changes, but the national insurance contributions, the change in minimum wage, the tax on fertiliser and an up to 211% tax hike for double cab pick-ups. All those extra costs take money out of a business.

I know that the Chancellor and the Prime Minister have both stated from the Dispatch Box that the IHT changes will not affect the vast majority of farms, and the Treasury has forecast that only 27% of all farms will be affected. However, as the Minister for Food Security and Rural Affairs knows, DEFRA’s own forecasts suggest that two thirds of farms will be affected by this destructive policy, and the National Farmers Union has recently published an analysis of the 27% figure, which found that it

“materially underestimated the true proportion”,

with around 75% of commercial farms to be affected. That is due to the Treasury using figures that are based on the 2021-22 agricultural property relief data, which is not representative of the current situation.

We have already had an exchange in interventions, so I ask the hon. Gentleman to first let me say this about land prices. I disagree with the point about land prices being inflated. We cannot buck the market. It is not the policies that inflate land prices; it is people coming in from outside agriculture who are putting up the prices.

The NFU said that farms may be affected by the policy—that is the language that it used—taking no account of estate planning or any other mitigations that people might use. As the Secretary of State said, people take action in the event of change. The NFU has ignored that in quoting its statistics.

If the hon. Gentleman will just listen to my speech and the examples that I am about to give with an open mind, he might change his mind.

The Treasury does not include in its figures the impact of business property relief claims; that also fits under the same £1 million ceiling. According to the NFU, 40% of farmers also claim BPR on machinery and livestock, which makes the £1 million ceiling even more restrictive. As shown in an earlier exchange, the Government have failed to complete a proper impact assessment of the changes to APR and BPR on the rural economy. The hon. Member for Rossendale and Darwen (Andy MacNae) might be interested to hear that the CLA modelling has shown that the changes will lead to 5% of rural businesses closing, with up to 190,000 jobs lost from the rural economy, some in very remote areas, and it will be difficult to replace them.

The hon. Gentleman mentions 5% of agricultural businesses being at risk. Is it not true that under the last Government, between 2019 and 2024, there was an 8% reduction in agricultural businesses in his constituency of North Cotswolds, thanks to the policies of his party when they were in government?

That was over a much longer period, but these changes will take effect much quicker. I can assure the hon. Gentleman that once the tax starts to bite, those jobs will be lost quite quickly. To put that into perspective, the OBR has predicted that only £590 million a year is due to be raised from this destructive policy. This Budget gave the Department for Work and Pensions a whopping £275.8 billion a year. The revenue raised from this tax would be a mere 0.2% of that total amount.

Over the past few weeks, I have had countless emails from worried farmers about their future, and I was lucky enough to meet some of them when they came up to London to protest recently. They varied in age from their late 20s to their early 90s, and it was a valuable meeting. Many had never protested in their lives, but they have chosen to use their voices now when their livelihoods are under threat. Again, to avoid press intrusion, I want to cite the case of David and his younger son, whose farm in the North Cotswolds has 265 acres, a suckler herd of 200 and a small flock of pedigree poll Dorset sheep. They have a range of modern and traditional buildings and have already diversified those. When they include their house, they estimate that their business is worth £5.5 million. David would be entitled to about £1.5 million in relief, and after the 50% relief from inheritance tax, with an effective rate that the Exchequer Secretary went through, that would leave him with a taxable amount of £800,000 on his death. The Minister might like to listen to this: that farmer only earns in total, on average, about £40,000 a year. How on earth is he expected to pay the tax and live on that £40,000? He will not. The farmer will have to sell up and the farm will not be available to future generations.

Would the Tories not have a lot more credibility on this issue if they owned up to the disaster that was Brexit? It opened us up to cheap imports, increased costs for farmers and put up barriers and obstacles to trading. Would they not have much more credibility in attacking the Government on this if they admitted that that was an absolute disaster for farming communities?

If the hon. Gentleman wants to call an Adjournment debate on Brexit, he is entitled to do so.

I was talking about the serious issue of how this farmer and many others up and down the country will be able to afford the tax—they will not. I understand that the Government have suggested that farmers should be forward-planning and gifting their farms to their children now, which would mean that they could avoid the tax in future. However, for many farmers, that is not an option.

I will take another constituent of mine, who farms near Fosse Way. He is still working on his farm at 93. He did not retire at 65 like many of us, but has kept working the long, hard days, as he did during the second world war, to ensure that we have enough food on our table. He has spent years planning to ensure that his grandchildren could inherit and take over the farming business. Instead, under this Government, his plan has gone completely out of the window, because he will have to live until he is 101 if he is to avoid the tax altogether.

The only option facing many farmers across the country is to sell off their land and stop farming. Those farmers have worked the land for generations. Their children will have seen their parents take over and will have expected to take over when they can, but now face a future of uncertainty. The Government fail to answer the question of what kind of person will buy the land when it goes on the market. It will not be the ones who have farmed the land all their lives. It will likely be foreign investors and hedge fund managers. They will not have generations of knowledge of how to work the land and will likely take prime arable land out of production, as they could possibly make more money from alternatives.

When I worked on the previous Public Accounts Committee—I urge the Minister to listen and to pledge that he will do this—I managed to obtain a commitment from the last Government that the food security index would be published in Parliament every year. Will the Minister give that pledge so we can continue doing that? That way we can see what effect the tax, the selling off of farms and taking land out of production is having and whether our food production is dropping.

I end with a plea to the Government to go back to the drawing board. I understand that a technical tax consultation on the changes is due to be published early in 2025. I urge the Government to use this time to talk to farmers and professionals across the country and find a way that will ensure that farmers such as Nigel do not lose their life’s work to the taxman. Some obvious alleviations and changes to APR and BPR would be to raise the threshold, so that more smaller farm owners and rental farmers would be exempt, and to have a longer transitioning period. That will help farmers like 93-year-old Nigel. However, the best outcome would be to reverse the policy altogether. Farming is under threat. I do not want to see the fabric of our countryside destroyed for future generations.

At some point, speaking limits will be introduced, so please think about editing your speeches. Before then, I call Andrew Pakes.

That was quicker than I expected, Madam Deputy Speaker, so thank you. It is a privilege to speak in the debate.

Nothing goes to the heart of the health, wellbeing and prosperity of a nation more than being able to feed and look after ourselves. Britain’s farmers and our farming workforce are part of the essential infrastructure that keeps this country going. I am proud to represent a constituency with such a rich food and farming heritage. Farming is in our DNA.

I pay tribute to our farmers and farming workforce. When we talk about any other industry, we recognise the skilled workers that deliver for Britain: the steelworkers, the miners, the nurses and the doctors. We should start every debate on food and farming with the same recognition for farmers. Food security begins with the incredible work of our farmers, and I thank them. We talk about people going the extra mile to look out for each other and care for our communities; farmers do that every day. This should therefore be a welcome debate on the future of farming. It should mention farming profitability and allow the hon. Member for Mid Norfolk (George Freeman) to talk about agri-technology and how we increase profitability. I hope that he does so shortly. Instead, what do we get? It is political opportunism from a party that should know better. I am proud to be part of the largest contingent of rural Labour MPs in Britain’s history. Labour Members were elected to protect and support our rural communities, and we will do just that. After 14 years, it is a bit rich of Conservative Members now to claim that they are backing Britain’s farmers.

I entirely endorse what the hon. Gentleman, my constituency neighbour, said about recognising and celebrating the work of farmers, and indeed farm workers, but does he understand—I am sure that most Conservative Members understand this well—that assets and income are entirely different things? Farmers’ assets are our landscape. Their wealth is our common wealth—something that the Government have seemingly failed to appreciate by imposing a tax on farmers that confuses their ability to make a living with the asset that is essential for them to feed the nation.

I thank the right hon. Member for being a champion in this House of skills and trade unions, which are sadly too rarely championed by Conservative Members. I recognise his points on our common wealth and the work that goes into looking after and protecting our land, but I also recognise the impact of the last Government on land and our farming communities. Let us look at the Conservatives’ record: 14 years of running down the DEFRA budget; a decade of austerity, which became a decade of insecurity; a Brexit turkey half-cooked; flood funding cut; trade deals that sold out British farmers; a farming budget £300 million underspent. If Conservative Members want to discuss food security and the future of our rural communities, bring it on.

The Conservative party saw more than 12,000 farmers and agribusinesses forced out of business since 2010. Farming has the lowest profitability of any sector in the economy. Conservatives abolished the Agricultural Wages Board and saw rural wages stagnate, as did many Liberal Democrat colleagues, who voted in the same Lobby. Now the Conservatives are defending the status quo when it comes to big business, big landowners and rising land prices. At the start of this debate, I thought that they were literally the last people on earth defending the status quo, but some of them seem to be talking about accepting some kind of policy, while those on the Front Bench seem to be saying that there should be no change whatsoever, so the merry-go-round continues.

The Opposition want all the spending but none of the responsibility. We talk about change. We know the change that this country voted for in our rural and farm communities. People voted for change because public services were broken, with rural schools crumbling, NHS waiting lists soaring, and rural GPs and NHS dentists harder to find. The Government are rightly focused on the cost of living crisis and improving access to GPs in our rural communities. What are the Opposition focused on? They are defending a tax break for estates worth up to £3 million while attacking a pay rise for the lowest paid workers in our rural communities. That says everything that we need to know about today’s Tory party.

As a fellow Cambridgeshire MP, will the hon. Member give us some examples of farms in his constituency that support the measure?

I certainly recognise from door-knocking in rural communities and talking to rural workers that food poverty has gone up in my constituency. People have found it harder to get a bus to go and work on a farm, and people working on farms are struggling with the result of Liz Truss’s mini-Budget, which crashed our economy. The reality of the debate that we should be having is that profitability for British farmers goes back a generation, not to 4 July. That is why the Government are pledging to put £5 billion into the farming budget and are committed to working with farmers and the sector to get that money into productive food production. It is why we will use the heft of public procurement to buy British farming produce. Food security goes to the heart of the challenges facing our country. Fixing our public services goes to the heart of rebuilding our rural communities. If the House wants to do both, it will start by rejecting the Opposition motion.

After the next contribution I will impose a time limit of five minutes on speeches. 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.

It is a pleasure to follow the hon. Member for Peterborough (Andrew Pakes), who is a fellow member of the Select Committee, and the hon. Member for Ribble Valley (Maya Ellis). They both, in their own way, made an important contribution to the debate by giving a bit more context to it. I will vote for the motion in the name of the Leader of the Opposition, not because it is the most elegant piece of drafting that I have seen in 23 years in the House, but because there is nothing in it with which I really disagree. It does feel, though, like a bit of a missed opportunity to move the debate onwards. I say that not as any real criticism, because it is a response to a Government measure in the Budget, which was also a bit of a missed opportunity.

It is worth taking a minute or two to pause and reflect on how things might have been done differently. We could have gone through the process that multiple Governments and Departments have gone through over the years by starting with a Green Paper or a White Paper, and looking at the way in which inheritance tax has worked, and some of the unintended consequences that it has generated. We have all heard of the super-rich buying up land and inflating the price as some sort of tax avoidance measure. I have not met a single working farmer who wants to defend that, so there was a real opportunity to do things differently. We could have built a consensus about the proper value of land, and about some stuff that is not really being spoken about in this debate.

I speak as a former solicitor. Thankfully, I never did any executory practice, but some of those who are still in practice and with whom I am in contact tell me candidly that, because there was 100% relief on agricultural land, they did not really give a great deal of thought to the valuation that went into the application for confirmation. That is bound to have had an impact on the figures on which the Government rely. Had we done things in a proper and reflective way, we would have been able to build consensus on values and thresholds, for example, and do things very differently.

I welcome the contribution of my former ministerial colleague. Had the tax been levied on exactly the people he describes—the super-rich, and non-working farmers—few would have complained, but it has been set at the wrong level. That is why I asked for detailed modelling to be made available to the House.

I think I just said more or less exactly that. A debate of the sort that I am talking about would have allowed for a wider debate about farming finances. We have had 70 years of very direct Government intervention in the agricultural economy through farm subsidies. Taking a step back, critical though those farm subsidies are, their net effect has ultimately been to keep farmers poor. There is now such an enormous mismatch between the capital value of the assets being farmed and the derisory return on them. DEFRA tells us that there is a 0.5% return on capital. Farmers in my constituency tell me that a £3 million farm will give them an income of about £25,000 a year. That is pretty much in line with DEFRA’s figures.

We hear about farmers working into their 80s. It is a slightly patronising and very romantic view of doughty farmers working on into their 80s because they are seized with a sense of vocation. There absolutely is a sense of vocation among farmers, but let us not forget that a lot of them work into their 70s and 80s because they have been running businesses that have had no spare money to put into a pension so that they can look after themselves in their old age.

The right hon. Gentleman makes an important point about just how little farmers earn, and yet they are consistently being described by Labour Members as asset-rich. Should farmers not fall into their definition of working people, and therefore Labour should be on their side rather than what they are doing to them?

“Working people” hardly does justice to farmers. Some of my young constituents told me they were working for returns of about £6 an hour. There is a reason I chose not to become a farmer at 16 and why I thought law was a more attractive career opportunity to pursue, but I bow to no one in my admiration for those who make that choice.

Of course, there is the question of those who have made their estate planning decisions on the basis of APR being available. Others have pointed to that, but it is absolutely critical, and it goes beyond estate planning. I wonder how many farmers over the years decided in a divorce settlement to take the farm as their part of the capital, because they have a familial and emotional connection to the land, and are now finding that what looked like an equitable settlement a few years ago risks being much more inequitable.

The particular opportunity I fear we have missed is that in relation to tenant farmers. The Tenant Farmers Association came up with an excellent proposal, which would reward landlords who grant leases in excess of 10 years with exemption from inheritance tax liability. That would be good for the very people who everybody on both sides of the House says they want to help: the small family farmers. There are multiple reasons why people might buy up agricultural land. I do not know anybody who takes an agricultural tenancy thinking that it will make them a member of the super-rich as a result.

The idea that is being mooted of a clawback—something on which we could see a bit of a sensible discussion and a consensus between the Front Benches—or the idea of a suspended inheritance tax liability which would crystallise only at the point of the land sale after the death of the owner, would both work to keep land in active food production. The irony of the way in which the Government have structured the measure is that, by allowing a 50% relief on farmland above £1 million, the purchase of agricultural land will probably remain an attractive proposition for the super-rich.

We have reached a point in the debate where we need to broaden it out beyond just inheritance tax, and look at the wider question of farming finance and ask ourselves how we can build a consensus that puts farming and food production at the heart of the countryside, where it truly belongs.

My constituency is a very rural one with 751 farms. It is an extremely important issue to my constituents and me. I hear their concerns and deeply empathise with their worries and fears. While it is a difficult decision for the Government to introduce an inheritance tax, it is one that is unfortunately necessary. I welcome the opportunity from the Opposition to debate the matter, largely because it allows us the time to discuss the reasons why inheritance tax has to be introduced.

There is a crucial need to understand the unique challenges faced by rural communities and the immense value they add to society. Farmers across the country, and most definitely in my constituency, are not just farmers; they help in a number of different situations, including recently with the floods in the Forest of Dean. They are vital to all of us in the community.

However, the economic turmoil of the past 14 years has left the Government with the difficult task of balancing the needs of the British people with the economic realities of running the country. The failure of the previous Government to secure a Brexit deal that protected the interests of farmers left many in a vulnerable position, struggling with increased costs, trade barriers and uncertainty. This Government’s new deal for farms aims to safeguard farmers’ interests, and we will do all we can to support them.

We are using the Government’s purchasing powers to ensure that 50% of food consumed in hospitals, army bases and prisons is from British farmers, putting more money in their pockets. We are introducing grid reform, allowing farmers to plug their renewable energy into the national grid. We are also seeking a new veterinary agreement with the EU to ensure that our friends on the continent can enjoy the incredible produce that Britain has to offer. This Government are actively working to improve the lives of farmers in a way that will benefit the agricultural sector and the broader economy.

Will the hon. Member accept that the changes to inheritance tax damage the economic realities in the UK because farmers will be disincentivised from investing in their land and increasing its productivity?

Although I empathise with the hon. Member’s comment, that is not exactly what I hear from the farmers in my constituency, which I will get on to shortly.

The impacts of Brexit, including trade barriers, labour shortages and disruptions in supply chains, have undeniably placed significant pressure on our farmers. It is somewhat ironic that the Opposition choose to complain about this Government’s actions when it was their failures that created this mess. The NFU even criticised DEFRA as recently as September for significant underspending amounting to £358 million over the past three years.

My constituents and, more importantly today, farmers in the Forest of Dean have felt the impact of the challenges first hand. Small businesses and families are all facing tough times, and the Opposition must acknowledge the broader context. The new initiatives that the Government are introducing, from the support for British farmers to green energy reforms, are vital steps forward, and I do not underestimate the difficulties that lie ahead for all of us. There is no quick fix for the challenges we face, and I fully recognise the pain and frustration felt by those who are struggling, especially in rural areas such as mine. But the Government’s focus is on long-term growth, sustainability and providing the tools that our farmers need to thrive. It is inaccurate to say, as has been raised, that no farmers agree with this policy; some farmers agree with it. They want better services, and they are happy to accept that reform needs to take place.

Some might be surprised to hear that I agree with the Leader of the Opposition’s recent comments to the media reminding us of the profound impact of the rising cost of living on individuals across the UK and farmers. She is correct that the impact is felt deeply and intensely by all in the country, including my constituents and farmers in the Forest of Dean, but let us not forget one important factor: it was under the previous Conservative Government that the cost of living crisis began for farmers. It is under this Government that it will end.

The Government have made many claims about this policy that are not credible, but I wish to address only four.

First, they outrageously claimed that they would not do it. The Secretary of State, the right hon. Member for Streatham and Croydon North (Steve Reed), said last year:

“We have no intention of changing APR.”

He said that given the situation that farmers are in, a Government cannot possibly go to people and demand more taxes. I am sorry he is not here today to hear his own words.

Secondly, the Government claim the change is unavoidable as they desperately need the £500 million they claim that it will raise. The £500 million that they give to farms overseas and the £9 billion that they were all too happy to hand over to public sector unions says otherwise.

Thirdly, the Government claim that these people are rich. That completely misunderstands agriculture and the countryside. A farm is not an asset on a balance sheet. Our farmers are stewards of their land, holding it for the next generation and the generation after that. It is not the fault of farmers—especially those in places such as my constituency in Kent, with its astronomical house prices—that their land is so valuable in a way that does not at all reflect their farm’s profitability.

Is the hon. Member, like me, slightly irate when she hears UK Government Ministers talking about how the terms of the proposed agricultural property relief are much more favourable than the rate that other people have to pay? Inheriting the family farm is not like inheriting your mother’s house. You do not liquidate the asset and then live the high life; you just get on with the job that you were doing the day before and the day before that. There is no enrichment involved, making the Government’s policy utterly baseless.

I could not agree more with the hon. Gentleman. My farmers tell me that these inheritance tax bills will take decades of profit to pay off, so they will keep doing the job that they were doing yesterday, but with a fraction of the cash that they had before—which was not a lot to begin with.

Finally, I want to address the idea that farmers can simply give farms away and live another seven years. It is incredible that the Government should introduce a tax in one breath and encourage people to avoid it in the next, and it makes a mockery of the whole policy. If it is true, then the tax will not raise any money for the Government, but instead increase bureaucracy and advisory fees for farmers. Mostly, though, for many people, it is not an option or it will not work. People have not been given enough time to plan for these changes. My constituent Ross grows hops in Tenterden. As he watched the Budget, his father, who is in his 70s, was suffering from sepsis and fighting for his life in hospital.

Especially in farming, our most dangerous industry, people cannot guarantee that they will live another seven years after having handed over the farm. Another of my constituents is in remission, having recently recovered from cancer. If the cancer returns, it is likely to be terminal. This constituent is in their early 50s. Are the Government seriously suggesting that my constituent should hand over, not just the farm, but the home that they live in to their teenage children?

Many of my farmers live in their farmhouses and are planning to work the rest of their days. They do not have pensions; they do not have plans that would allow them to spend the last decade of their lives—of course, it may be much more—no longer farming the land that they have farmed for the whole of their lives up until this point. Finally, to raise a point that seems to have been almost entirely ignored, doing this will incur eye-watering capital gains tax bills. For some of my farmers, it will mean hundreds of years’ worth of land revaluation that they similarly cannot afford to pay.

Is the hon. Lady aware that the capital gains tax starts from the moment of a person deceasing, not from when they bought that land?

What I have been told by my farmers, based on the tax advice that they have been given, is that the bills—and not just the inheritance tax on decades of profits—will be completely unaffordable.

Farming is hard. It is not like any other industry: it is a culture and a way of life. It is lonely, revenues are uncertain, profits are tiny and cash is tight.

I will not, as I am coming to the end of my speech.

It is absurd and shameful that this Government, looking to fund their union pay rises and vanity energy projects, are putting this pressure on those who do the back-breaking work of growing our food. Farmers already have appalling problems with mental health and suicide: the Royal Agricultural Benevolent Institution tells us that a third of farmers may be depressed and half may be suffering from anxiety. One of my farmers says that his father is now kept up at night by the thought that he will leave his children a crippling debt that will make their lives financially impossible. Another told me that his father says that he just hopes that he dies before the changes come in. This policy is illogical, inconsistent, dishonest and wrong.

To misquote Brian Clough, I would not say that my constituency is the most beautiful in the country, but it is certainly in the top one. We have generations of farmers to thank for that beauty—those who protected the land and nurtured nature long before the Peak District was designated Britain’s first national park. If I thought for one second that these changes to agricultural property relief threatened future generations of farmers in my constituency, I would not vote for them, but I do not.

Last month, I spent a very enjoyable afternoon scoring the senior young farmers at Radnor young farmers club. These are really admirable young people who spend their afternoons and evenings looking after youngsters, often those as young as 10, and trying to encourage them into farming. Is the hon. Gentleman not concerned about the message that this change sends to our young farmers?

No. The message from this Government is that we are committed to farming, and to making it profitable and sustainable. That has to be the message that we send out to those young farmers.

There is no doubt that farmers in my constituency have been struggling terribly for the past 14 years, working seven days a week, 12 hours a day, for very little reward. The last Government promised them the earth, but left them in the sheep dip. After all the Brexit promises, what they got was the Leader of the Opposition selling them out in trade deals with New Zealand and Australia. Boris Johnson promised farmers that subsidies would stay at 100%, but then the Government phased out the basic farm payment. The Opposition’s incompetence saw farmers miss out on £358 million that could have been in their back pockets when they desperately needed it, and then came Liz Truss. Her mini-Budget and all those unfunded tax cuts—a point that I will return to—crashed the economy, causing interest rates to rise and driving many farmers to the brink. Over 12,000 farmers and agricultural businesses were lost under the last Government, so we will not take any lectures from the Opposition about the farming industry.

The hon. Gentleman has 428 farms in his constituency. How many of those farmers will thank him for supporting the Government today?

I live in one of the rural villages and speak to the farmers in my villages all the time. The fact is that those farmers voted for me because they were so let down by the last Government.

I will not take any more interventions at the moment. Before the Budget, I sat down with farmers in my constituency. They wanted to talk about two things. First, they were concerned about the effect of the changes to APR on family farms.

No, I will not. Secondly, they were concerned about cuts to the farming budget. The Chancellor delivered £5 billion for the farming budget, the largest ever investment in sustainable food production and nature recovery, and she delivered in terms of protecting family farms in my constituency.

No, I will not give way at this stage. Let us be clear: only 4% of estates in this country pay inheritance tax. As we have repeatedly heard, these changes will mean that a couple will be able to leave £3 million-worth of estate to their children without paying a penny in inheritance tax. To put that in context, if a couple owned a £3 million mansion, they would be paying £940,000 in inheritance tax.

I will not give way at this stage. Those estates over the threshold will have a 50% reduction in the amount they pay. We have already heard that the seven-year rule will continue to apply, so farming families will be able to make plans for the future.

Sorry, I will not give way at this stage.

This debate has, however, shone an important light on one issue, which I am grateful to the right hon. Member for Orkney and Shetland (Mr Carmichael) for raising: the fact that our farmers are working day in, day out, for very little profit. The question is how we support them to be profitable again. Energy bills are one of the biggest costs farming businesses face. This Government will help bring down those costs through GB Energy and by introducing grid reform to allow farmers to plug renewables into the national grid. We must protect them from being undercut by foreign imports.