Farm schemes funding ‘review’ was last thing sector needed, says MP

Wednesday’s Budget is “no way to treat” farmers and food producers, MPs have heard.

Conservative MP Neil Hudson (Epping Forest) claimed in the Commons that the Government had broken its promises to farmers.

Tim Farron, Liberal Democrat rural affairs spokesman, had previously criticised changes to the agricultural property relief, warning of a “death knell” for farmers.

But Treasury minister James Murray said on Thursday that changes to the agricultural property relief from inheritance tax will still allow family farms to pass down through the generations.

The Government is “restricting the generosity of agricultural relief” in a bid to make the inheritance tax system “fairer”.

It will also put almost £600 million towards flood defences and farm schemes in 2024/25, but warned “it is necessary to review these plans” for future years.

But Mr Hudson (Epping Forest) warned “the last thing this sector needed was to learn it will now not get the stability and the support of investment that is so desperately needed”.

He told MPs: “To state in the Budget document that farm schemes and flood defence funding are going to be ‘reviewed’ is no way to treat our farmers and rural communities.

“We’ve heard a lot today about agricultural property relief but changes to agricultural property relief could devastate our farming sector, risking decimation of the sector we rely on to feed us and to support our environment.

“The impact of this policy on family farms, the tenanted sector and our food security would be untold.

“For families now to have their succession planning turned on its head, this inheritance tax pressure will have profound impacts on people’s mental health.

“Farming communities face huge challenges, from shock events like floods, animal disease outbreaks and chronic pressures with finance and rural isolation.

“These are people who we know are at higher risk of mental health issues and tragically suicide as well.”

Mr Hudson continued: “Gallingly, this policy decision has broken the promises that Labour has made to our farming communities.”

National Farmers’ Union (NFU) president Tom Bradshaw warned after Wednesday’s announcement that the Budget “not only threatens family farms but will also make producing food more expensive”.

Mr Farron said: “This is a family farm tax which risks ringing the death knell for local farmers and the small businesses who rely on them.

“Small family-owned farms will also be hit by this and will be forced to sell up, with young people robbed of their opportunity to farm.”

From the Government frontbench, Mr Murray said: “The main rate of agricultural property relief on all assets was set at 50% until 1992, at which point it was raised to 100% just before the election that year.

“Let me be clear, these reforms still provide a very significant level of relief to protect family farms.

“The Chancellor confirmed yesterday that the first £1 million of combined business and agricultural assets will continue to receive 100% relief in most circumstances.

“Assets above £1 million would attract a 50% relief, equal to the pre-1992 rate, which means that they will pay inheritance tax at a rate of 20% instead of 40%.

“Our reforms in a tough fiscal context still leave the relief as being far more generous than it has been in the past and it’s important to note that agricultural and business property relief is in addition to the nil-rate bands and other exemptions, such as the transfers between spouses and civil partners, and the rules around gifts.”